The Invention of Convenient Racism (Part 2)
“For most investors, the squalor and violence of Jim Crow was too visceral to endure. They just wanted the proceeds of racism, not the social and emotional burdens of dealing with it.”
Investing, like working out or eating right, is one of those things that everyone wants to do, but no one knows how to do. We try to get better. We call our parents to learn more about 401 K’s. We listen to podcasts about “making our money work for us”. We download random apps that promise to teach us “the secrets of the stock market.”
But even after binge-watching Mad Money and reading the Wall Street Journal, our investment efforts, just like our Skechers Shape-up workouts or Naked Juice cleanses, usually yield pretty poor results. In fact, the average investor only receives returns of about 2.6 percent. For many, that is not enough. But instead of beating these odds by studying market trends or betting on bold new products, many people often resort to scams to increase their returns.
They invest in credit cards companies with 20% interest rates, banks that refinance homes with subprime mortgages, and check-cashing outlets that charge exorbitant fees. The victims of these schemes range in both income and race, but the data shows us that they are disproportionately poor, and disproportionately black.
Whether it’s Wells Fargo peddling over $175,000,000 in predatory loans to blacks in Baltimore or Bank of America charging higher fees and rates to over 200,000 minority borrowers across the nation, the use of discrimination to boost returns is widespread. These tactics aren’t modern inventions, but simply the most recent exploits in our country’s long history of profiting from racism — a history that started in slavery but extends deep into the twentieth century.
In the 1930s, 40s, and 50s, purchasing rental property in poor, black neighborhoods was one of the safest, most profitable investments you could make. With African Americans banned by law from renting in white neighborhoods and systemically denied mortgages by banks, they were herded into segregated ghettos. Here, slumlords operated a near-monopoly on the black real estate market and gouged tenants monthly.
As a Jim Crow slumlord, “you could expect between 27 and 33 percent on your investment every year. You’re talking about a property that you could then buy and months later it’s entirely paid off, and all you’re getting is profit,” says, N. D. B. Connolly, Associate Professor of History at Johns Hopkins University.
Undeniably, these slums were goldmines, but operating them was greasy work. Walking down the hallways, your ears pounded with the sounds of rats scurrying and couples fighting over loud music. You would have to listen to tenants complaints of roaches clogging their sinks and how the building reeked of must and vomit. Then you had to plug these complaints, with a brutal demand of rent money or a threat of eviction.
For most investors, the squalor of managing racially segregated housing was too visceral to endure. They just wanted the proceeds of racism, not the social and emotional burdens of dealing with it. So to help them with this refining process, real estate investors hired subcontractors and property managers to handle the grunt work.
In his book, A World More Concrete: Real Estate and the Remaking of Jim Crow South Florida, Connolly recounts the experiences of Luther Brooks, one of these property managers. Brooks, who worked for slumlords in Miami, “talks about the fact that 60 percent of the units he managed were never even seen by their landlord at any time during the life of the property. And Brooks managed almost 14,000 units in Miami. Half of all the black people living in South Florida during the Jim Crow era lived in a property managed by Luther Brooks.” Through the efficiency of this system, landlords and their families could expect checks to arrive regularly in the mail whether they lived in Miami or not. But the convenience did not stop here at management. The use of subcontractors also simplified the sale and purchase of slums. “In some cases in the Jim Crow South you [could] acquire a rental property with the ease with which we can now acquire a timeshare,” says Connolly.
In Miami and other cities across the nation, segregated slums provided investors with a hassle-free way to profit from racism. This siphon sucked cash from poor, black communities to fund the college tuitions, political campaigns, and entrepreneurial endeavors of America’s growing middle class. This profiteering continued uninterrupted until the start of the Civil Rights movement.
From 1955 to 1968, activist exposed the violence of segregation — the violence investors paid subcontractors not to see. It was both physical (bombs blowing up churches and clubs beating grandmothers) and economic (malnourished children and families living in dilapidated housing). It was broadcasted in Technicolor. It was for all the world to see.
Around the globe, people watched in horror, and for a brief moment, the gig was up. And everyone who profited so much from racism and segregation was now forced to confront the violent, ugly truth. Dorian Grey had looked at his portrait, and the flesh was falling off his face.
“White America was ready to demand that the Negro should be spared the lash of brutality and coarse degradation, but it had never been truly committed to helping him out of poverty, exploitation, or all forms of discrimination. The outraged white citizen had been sincere when he snatched the whips from the Southern sheriffs and forbade them more cruelties. But when this was to a degree accomplished, the emotions that had momentarily inflamed him melted away. White Americans left the Negro on the ground and in devastating numbers walked off with the aggressor…” — Martin Luther King Jr, 1967
What Dr. King describes here is how during the Civil Rights movement, America only sought to end the live broadcast of its violence, but not the commerce that this violence supported. After the flashpoint of protest ended, and the more coarse forms of racism were banished, much of the exploitation continued. And today, fifty years later, though a great deal has changed in the texture and decorum of our racial politics, banks are still redlining, cities are still segregated, and investors are still profiteering.
Now, when we see the more vivid indicators of our unequal society — black people killed at the hands of the police or loitering asking for money in the street, we console ourselves by saying any hardships they endure are a product of their lack of personal responsibility and this suffering isn’t what we intend for them. But as Ta-Nehisi Coates writes, “The point of this language of ‘intention’ and ‘personal responsibility’ is broad exoneration. Mistakes were made. Bodies were broken. People were enslaved. We meant well. We tried our best. ‘Good intention’ is a hall pass through history, a sleeping pill that ensures the Dream.”
So we see even our modern language is another front — another way to separate the wealth America enjoys from the pain millions of citizens endure. And so the masquerade will continue until the country’s citizens realize that the dividends they receive from investing in racism are only a fraction of what they would receive, if they choose to invest black people instead.
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Link to Part 1 below:
