Historian Keeanga-Yamahtta Taylor on the Racial Wealth Gap and the Crisis of American Capitalism

“In the United States, it’s very stark that the past is not yet past. Problems that we think of as historical in fact continue to impact our lives on a daily basis.”

These are the words of historian Keeanga-Yamahtta Taylor, who has dedicated her career to the impacts of systemic racial inequality resulting from historical and contemporary economic policies — as well as the transformative power of social movements.

Her latest book, “Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership,” was nominated for the 2020 Pulitzer Prize.

Taylor, who is a MacArthur Fellowship, or “genius grant,” recipient and professor in the Department of African American Studies at Princeton University, recently spoke to KQED Forum’s Alexis Madrigal for a conversation on the financial structures of racial inequality in the U.S.

Read on for historical and contextual highlights from their conversation, and listen to the full interview by hitting the pink-and-white play button above.

‘Locked out’

According to Taylor, an “urban crisis” developed in the years following World War II — one that had deep and long-lasting impacts for Black communities especially.

After the war, she said, African Americans were “locked out — of not only the emergent spoils that came about through the war effort, but also through the exclusion from the social safety net that had been created in the United States in the 1930s.”

The exclusion of many Black people from state-mandated aid and the private sector “meant that cities, where Black people were concentrated, were undergoing enormous hardship in terms of not enough good-paying jobs,” Taylor said. Especially as “jobs were moving to the periphery, to the suburbs for cheaper tax rates, and their housing was in a deplorable state,” she added.

“The U.S. government’s policies from the 1930s had privileged building new housing in the suburbs, and that resulted in the deterioration of housing in American cities,” said Taylor.

African Americans’ imminent migration from rural and southern areas to northern cities was not rewarded with “the American Dream that earlier waves of immigrant populations had found in American cities,” said Taylor.

Instead, she says, quoting Malcolm X, they found “an American nightmare.”

To Taylor, “that kind of exclusion and deprivation in the face of enormous wealth and prosperity” defined the urban crisis, which led to a series of social uprisings in the 1960s. And what became known as the “urban crisis” was in fact ultimately “a crisis of American capitalism that was having its greatest consequence in the lives of ordinary Black people who were city-bound,” she said.

‘The exclusionary practices of the state’

Learning about the Housing and Urban Development (HUD) Act of 1968 during her time in graduate school would set Taylor on her path of study.

Taylor calls the act, signed by President Lyndon B. Johnson in August of that year, “the first attempt by the federal government to help low-income working-class Black renters become homeowners.”

The housing programs of the 1930s HUD Act, which produced white working-class homeowners, “had now come to be understood as exclusionary and involving practices that have been described as redlining,” Taylor explained, and “Black people were largely excluded from those programs.”

Taylor notes how the federal policies enacted in the wake of the uprisings of the 1960s were prefaced by damaging and oppressive sentiments of the Nixon administration.  In the late 1960s, Taylor explained, the federal government opened up homeownership to working-class Black families — but under then-president Nixon’s popularized idea “that if they own their own homes, they won’t burn down the cities.”

“Many Republicans who backed this legislation believed that this was an opportunity to give Black people a stake in America’s cities,” she continued.

According to Taylor, this was “also a signal from the real estate industry that there was a market to be constructed out of the inner city.”

She explained the particular implications of this transitional period, saying, “the programs of the ’30s that had incentivized the movement of white people out of cities into suburban areas had left an abundance of housing in American cities unavailable, and  unused.”

However, in Black neighborhoods, “that housing was distressed. It was old. There had been very little new building,” Taylor explained. “All of a sudden, those conditions that had been created out of the exclusionary practices of the state were now used as evidence to treat Black consumers differently,” said Taylor — but now “those neighborhoods were determined to be risky.”

According to Taylor, the most socially oppressive change brought about by the 1968 HUD Act was that “Black people could now become homeowners, but it would be on different terms than had been available to white people in the 1930s.”

‘The financial roots to segregation’

For Taylor, there have been many fundamental misunderstandings about segregation — both historically and continuing in the present day.

“We often think of segregation as just an expression of the will of white people,” she says. “‘Do white people want to live near Black people? Do they want Black neighbors?'” But Taylor advocates a different focus: on “the financial roots to segregation, and understanding the economy that developed around segregation,” said Taylor.

“There was a willingness for the housing industry and the banks to shift their practice in the private sector,” said Taylor. However, “it was all done with the unspoken assurance that a new housing market for Black people could be built — but it had to be done so on a segregated basis.”

When asked by Forum’s Madrigal about the implications of utilizing a “colorblind market approach” to solve for lower-income housing, Taylor explained that it was “a huge problem.” The process of making racial discrimination in housing illegal in 1968 “as if nothing ever happened,” said Taylor, in fact demonstrated “no effort to redress or repair the damage that had been done to the physical property in Black-majority neighborhoods.”

The systemic oppression of real estate appraisal

Black neighborhoods, says Taylor, have been “systematically devalued” by real estate appraisal — and that has fundamentally changed “what homeownership means as a wealth-building vehicle” for Black people.

“We really need to challenge this assumption that the promotion of single-family homeownership is the most important or even possible way to end the racial wealth gap,” said Taylor, “because it assumes that Black people owning homes has the same financial impact of white people owning homes.” Because in reality, she notes, “Black houses and Black-majority neighborhoods have been grossly devalued.”

Taylor cites a study co-authored by Andre Perry, a senior fellow with the Metropolitan Policy Program at the Brookings Institution, which found that homes in majority-Black neighborhoods are devalued by “$150 billion less than homes of similar quality in white-majority neighborhoods.”

And according to Taylor, “there is not a single moment in the 20th century where the real estate and banking industries in the facilitation of housing creation have not considered race.” The exclusion of Black people, she says, is “absolutely central to constructing, for [the real estate and banking industries], a healthy housing market.”

“Not only does this mean that homeownership literally functions differently for poor Black people,” said Taylor, “but it should compel us to question the role of homeownership in our society and why we have allowed this to become the vehicle through which we solve all of our large financial crises.”

“This is an opportunity to think differently about what social provision is,” said Taylor. “For Black people, homeownership is not a viable road to ending the racial wealth gap in the U.S.”

“One of the questions that we have to ask is: How do we get the private sector … out of the production of housing for ordinary people?” said Taylor.

To listen to Taylor’s full interview, click the pink-and-white play button at the top of this post.