History repeats. Researchers argue that business elites bend local government to their will, ensuring the luxury residential and commercial development that they want gets built, regardless of competing community and housing needs. In the first two decades of the new millennium, public and private investment rained down on favored parts of central cities.64
Across the country, cities supported innovation districts, tech and startup incubators that could enhance or transform a local economy. They wooed millennials and talent for whom global or coastal cities became too expensive. No city claimed that constructing white space buffered from Black space was its aim, though centrifugal social forces and a phalanx of public and private policies can do just that. Neighborhoods on an upward trajectory, like those of the White L in Baltimore, were shaped in part by avoidance of Black and Latinx people. Areas targeted for development—often downtown, near a university, a hospital, or another key institution—often became whiter than the rest of the city.65 Segregation made it easy for developers and individuals to select these favored areas, especially in northern and midwestern cities to which great migrants flocked.
City planner and writer Alan Mallach discovered this pattern in his analysis across all census tracts in older postindustrial cities that experienced revitalization in the first two decades of the twenty-first century. In Baltimore, four people lived in a neighborhood that was declining for each person who lived in a reviving or gentrifying area. In the Black neighborhoods of Baltimore, Cleveland, Newark, Pittsburgh, and beyond, the number of jobs and businesses were falling. Even some middle-class Black neighborhoods became poor. Conditions in the hood grew worse, even as the overall economy may have improved. Descendants were trapped in poverty—sustained, multigenerational poverty. The growing polarization of highly segregated cities is along this fault line between neighborhoods of concentrated abundance and concentrated need.66
Chicago’s largest and most populous neighborhood, Austin, is overwhelmingly Black. About 40 percent of its residents earn less than $25,000 annually. It was savaged by foreclosures after the financial crisis yet excluded from many of the city’s key neighborhood development programs.67 An Urban Institute study released in 2019 found that majority-white neighborhoods in Chicago received about three times more public and private investment than majority-Black neighborhoods.68 Private actors tend to invest more in affluent white space.69 Supermarkets, for example, are common in white neighborhoods, and they offer healthier and cheaper food than the small grocery or convenience stores much more likely to be found in poor Black neighborhoods. Researchers have linked this neighborhood disparity to disparities in obesity between Blacks and whites.70
For descendants on the South and West Sides of Chicago, watching booming downtown development while the city shuttered school after school in their neighborhoods added to the insult. Chicago Public Schools (CPS) closed seventy schools over eight years by 2012. Then, in 2013, Mayor Rahm Emanuel closed fifty additional public elementary schools—the largest one-time mass school closure in the country. The Great Cities Institute at the University of Illinois at Chicago found that race was a significant determinant of closure. Schools with large numbers of Black students had a higher probability of closure than other schools with comparable test scores, locations, and utilization rates.71 Majority-Black zip codes had disproportionately high closings while closings in zip codes that were about one-third Black or less were disproportionately low.72 As school infrastructure in Black hoods evaporated, the city invested in new options elsewhere. An investigative report by a local public radio station in 2016 revealed that new school building expansions since the 2013 closures were “overwhelmingly granted” to specialized schools that serve relatively low percentages of low-income and Black students.73
Other cities mirror this pattern of disinvestment in the infrastructure of opportunity for Black neighborhoods. In Cleveland, Detroit, New Orleans, Philadelphia, Baltimore, and New York City, leaders in the name of “reform” closed schools en masse in poor Black and brown neighborhoods. In Baltimore, the Black Butterfly endured half of the school closures in the city; schools in affluent white communities in north Baltimore were spared.74
Mallach argues that cities misallocate resources. They confer billions in tax abatements or direct investment in sports stadiums (largely to entertain suburbanites), convention centers, and marquee commercial projects supported by developers or influential business leaders rather than in far cheaper services that can transform marginal neighborhoods or individual lives. He suggests cities should invest in programs and infrastructure that eliminate the hurdles to opportunity for low-income and underemployed adults, like specialized training for the many jobs that do not require a college degree and public transit that makes commutes to job-rich places affordable and sustainable.75
The story of Baltimore and the Red Line that was not built, and the diversion of funds to white areas, illustrates a common racial dimension to this trend of disinvestment from transit. Similar stories could be told about other metro areas with large numbers of descendants. More than 70 percent of public transit agencies in the United States have recently cut service or raised fares, with a disproportionate impact on the poor.76 Poor folks need public transit more than others, but in many cities, the poorest neighborhoods have the worst access to it.77
Even with programs designed to help areas in need, affluent white spaces appear to be first in line. An NPR investigation of federal disaster relief spending found that it tends to exacerbate wealth inequalities. The rich get richer and the poor get poorer after a hurricane, flood, or other natural disaster because wealthy homeowners with savings are better able to meet rigid risk requirements for disaster relief. Sociologists confirm that white neighborhoods benefit disproportionately from FEMA spending; after disasters, Black residents tend to lose wealth and white residents gain wealth.78 Like HOLC’s redlining in the 1930s, FEMA’s risk standards become destiny for Black neighborhoods. Black people already savaged by predatory lenders and foreclosures during the Great Recession, drained of equity and homeownership, and reduced to renting have a very hard time recovering both from natural and man-made disasters.
The wealthy also benefited from the Trump administration’s Opportunity Zones program. Lucrative tax incentives, in theory, would be invested in “low-income communities,” selected by state governors. Governors were given discretion to pick a limited number of qualifying census tracts from their states, including nonpoor areas adjacent to poor areas.
The program, included in President’s Trump’s signature 2017 tax legislation, was itself arguably an exercise in exacerbating inequality. The tax incentives for Opportunity Zones were extraordinarily generous, completely eliminating any taxation of capital gains for long-term investments. They precipitated a marketing bonanza by Wall Street, and critics painted the program as a flawed giveaway for projects likely to have happened anyway, without controls to ensure that poor communities and residents actually benefited.79 Once again, a small cadre of capitalists grew richer exploiting “the ghetto,” here an idea stretched to include adjacent white areas. In Louisville, Kentucky, rapidly gentrifying areas like Nulu, Butchertown, and Portland that had already received major capital investment were named Opportunity Zones, along with the central business district, while seven of the city’s eighteen poorest tracts were left out of the program.80 In 2020, presidential candidate Joe Biden and congressional Democrats proposed reforming the program to create more jobs and investment for low-income communities and prevent abuses.
Private actors also favor whiteness and disfavor Blackness. Redlining and denial of traditional credit to Black Americans continues. The Center for Investigative Reporting sponsored a year-long study, published in 2018, that analyzed thirty-one million records revealed by the Home Mortgage Disclosure Act. Even after controlling for applicants’ income, loan amounts, and neighborhood, the center found racial disparities in mortgage lending—a disturbing pattern of denials of Black and La
tinx applicants for traditional mortgages where white applicants with similar qualifications would be accepted. This modern-day redlining, persisted in sixty-one metro areas, from Atlanta to Detroit, Philadelphia to San Antonio, and beyond.81
Philadelphia, the City of Brotherly Love, where Black Americans and abolitionists once pursued their dreams for happiness and freedom, was among the worst sites for lending discrimination. According to the Center for Investigative Reporting study, banks focused on serving whites in white areas. Despite fair credit laws, they placed nearly three-quarters of their branches in majority-white neighborhoods, and whites received ten times more conventional mortgages than Black and Latinx applicants in 2015 and 2016. The greater the number of Black or Latinx people in a neighborhood, the more likely a loan application would be denied, even accounting for income and other factors.82
Again, as a recent Federal Reserve study suggests and other research has shown, the redlining practices that the federal government set in motion in the 1930s persist today in the same neighborhoods originally marked as hazardous.83 Borrowers from these neighborhoods are more likely to be denied traditional credit and preyed on with subprime products, showing that despite a century of resistance, anti-Black geographic patterns of exclusion and exploitation are remarkably stable and institutionalized.84 Predatory installment contracts, the very same usurious products peddled to redlined descendants from the 1930s to the 1960s, have returned. Large financial firms, backed by private equity investors, swarmed like vultures to pick through the carrion of the 2008 foreclosure crisis. They could purchase a foreclosed home at auction, say, for $5,000, and sell it immediately with no repairs through a land contract for $30,000. The land contract is designed to produce failure by the buyer, who believes she is acquiring a home but in fact accumulates no equity unless and until the final installment is made. Under the contract’s usurious terms, the vulture investor intentionally churns the property, swiftly evicting the installment buyer and moving to the next target. Black and Latinx people in marginal neighborhoods were disproportionate targets for this plunder. Their dollars, earned through “essential” work, which should have gained them equity, instead were transferred to financial titans.85 This is the latest iteration of what author and academic Keeanga-Yamahtta Taylor calls “predatory inclusion” in her critical book Race for Profit. Rather than transforming credit practices and creating real inclusion in housing markets after the passage of fair housing and credit laws, the same institutional players that shaped residential segregation simply found new ways to extract profit in Black neighborhoods.86
Cities, too, engage in financial predation. I discuss later the use of predatory policing of descendants to raise revenues. Less known are disparate practices in property taxation. A recent national study by the Center for Municipal Finance found that cities are taxing owners of low-valued properties at higher rates than they should and taxing owners of high-valued properties at lower rates than they should.87 For this and other systemic practices, legal scholar Bernadette Atuahene identifies localities including Ferguson, Missouri; New Orleans; Washington, DC; and Detroit as “predatory cities.”88
The processes I have described are what systemic racism looks like. Understanding it requires neighborhood analysis comparing how the denizens of white space and Black and brown hoods are treated by public and private actors. Political and market processes favor wealthy white areas, and their advantages have effectively been institutionalized or locked in.89 Those who live elsewhere, particularly in the hood, are not favored and can be preyed on. The game of opportunity, indeed, is rigged. This inconvenient truth is very evident in the way America has chosen to finance public education.
CHAPTER 6
MORE OPPORTUNITY HOARDING
Separate and Unequal Schools
Communities that maintain boundaries reap tremendous rewards for their children. In 2016, overwhelmingly white school districts received $23 billion more in state and local funding than majority-nonwhite districts that serve about the same numbers of children.1 Reflect on that. The same number of children, and the whitest set, receives $23 billion more. A kindergartener, still innocent of the ways of her country, when presented with this word problem would scream “That’s not fair!” As George Orwell satirized in Animal Farm, despite the shared revolutionary value, “All animals are equal,” the pigs became superior tyrants, though intellectually honest ones. In the end they openly amended the farm’s communal principle with, “but some animals are more equal than others.”2
This great disparity is caused by inequality in property tax wealth and the widespread practice of relying heavily on property taxes to finance public education. Differences in local tax bases, in turn, result from the architecture of segregation that America intentionally created. It does not have to be this way. A report by the Organization for Economic Co-operation and Development notes that US public education systems reinforce the disadvantages of segregation, while other OECD countries mitigate these disadvantages. OECD countries with high-performing education systems put their most talented teachers and extra resources in disadvantaged schools and finance education at the state rather than the local level.3 The vast majority of US states do the exact opposite.4
States try and often fail to make up the difference between what poor districts can spend to educate children compared to affluent districts. According to the Education Law Center’s most recent annual report card on state school finance, the majority of states “have unfair funding systems with ‘flat’ or ‘regressive’ funding distribution patterns that ignore the need for additional funding in high-poverty districts.” Only eleven states had “progressive” funding systems that adequately funded poor districts, down from a high of twenty-two in 2008.5 In the wake of the Great Recession, poor school districts lost ground. Brutal cuts in school budgets because of the COVID-19 pandemic are likely to have harsh impacts on poor districts and deepen these structural inequities.6
Every state in the nation has a constitution that guarantees public education. Lawyers and activists invoke these state education clauses, and while legal theories have changed over decades, segregation of affluence and of need leads to endless battles over how to pay for schools that actually meet state-mandated school performance goals. In many states, court-ordered school finance reforms did increase funding for poor school districts. And more funding, invested wisely in higher teacher salaries and smaller class sizes, has been shown to improve student outcomes for poor children.7 But school finance reforms are always subject to political challenge and easily perceived in zero-sum terms by affluent and middle-class taxpayers. The outcome of most state legislative debates tends to reflect the desires of organized, affluent areas.8
New York’s state constitution guarantees a “sound basic education” to the children of this empire. New York also has the most segregated school system in the country, according to the Civil Rights Project of UCLA.9 Local sources supply 55 percent of funding for public schools in New York, state aid provides an additional 40 percent, and federal grants contribute the last 5 percent. As a result of a lawsuit brought by the Campaign for Fiscal Equity in 2006, the state created a Foundation Aid funding formula designed to reflect the actual cost of providing a “sound basic education” in a given district. A court-appointed special master consulted with experts on inputs, outputs, and regional differences to develop a formula that was supposed to reflect the higher costs of educating children in concentrated poverty.
The Schenectady City School District, one of the poorest in New York, is one of those districts. It was supposed to have 100 percent of Foundation Aid in order to meet the constitutional mandate for educating the children it serves. In 2014, it was receiving 54 percent of Foundation Aid. It filed a civil rights complaint with the US Department of Education’s Office for Civil Rights (OCR), alleging that thirty-seven majority nonwhite school districts received less than their constitutionally promised Foundation Aid and that the whiter a school district, the mor
e likely it was to receive all, or close to all, its promised Foundation Aid.10 The Middletown City School District filed a similar complaint.11
Like the descendants of Baltimore after Governor Hogan canceled the Red Line and reallocated resources to white areas, Schenectady’s complainants alleged a Title VI violation under the Civil Rights Act of 1964. They noted that the median school district in the state was funded at 82 percent of constitutionally mandated Foundation Aid, and the majority of districts at or above this level of funding were majority-white districts. Such “white” districts had only a 5 percent chance of being funded at 60 percent or less of what the Foundation Aid formula said was due. Again, the Schenectady district, 66 percent nonwhite and 74 percent poor, then received only 54 percent of the Foundation Aid to which it was entitled.12
As a result of its low funding, high need, and state budget freezes and shortfalls, Schenectady had to make painful decisions, including cutting instructional support staff and guidance counselors; eliminating some pre-K programs, electives, and advanced placement courses; and increasing class sizes and student-to-teacher ratios. Schenectady students had to endure shortages of textbooks, library and technology resources, physical education, and extracurricular offerings. The District struggled to educate students with special education needs or students who were English-language learners.13 Schenectady and similarly situated poor cities were faced with the conundrum of raising property taxes to pay for critical education needs, which suppressed property values and made it hard to attract economic development, rendering struggling communities even more disadvantaged.14
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