Sunday, July 21, 2024

Real Estate Red-Lining: Government Facilitates Racism

“Redlining” is the practice of limiting homeownership in a town or in a neighborhood on the basis of race, or what is perceived as race. It was a real estate practice, found in some locations in the United States in the twentieth century, but now almost extinct. Simply put, real estate agents and homeowners were told to sell houses only to people of certain genetic groups.

“Sundown towns” and “sundown neighborhoods” are a closely related concept. They were areas in which people considered to be “Black” were not to be after dark: i.e., those people weren’t to spend the night, and certainly not to own real estate in those areas. They might be tolerated if they were briefly there during daylight hours for business reasons.

Redlining, and the creation of sundown towns, came into being at the end of the Reconstruction Era in American History. Until the late 1870s, the Republican Party had legislated the presence of military and civilian officials in the former Confederate States in order to protect and preserve the civil rights of the former slaves. It worked: Black people voted in ever-increasing numbers, and African-Americans were elected to Congress and other high offices.

But at the end of the Reconstruction Era, this good trend ceased. The Democratic Party took over city, county, and state governments, and began enacting Jim Crow Laws, and enacting policies which were segregationist and racist.

The principle at work in these events is this: racism is a vile and evil sentiment; it remains merely a sentiment, and therefore toothless, until governments become sufficiently powerful to change sentiment into action.

An undergraduate researcher at the University of Michigan, Audrey Melillo, explains that in a typical “sundown town,” the leaders “encourage people to sign a pledge that they wouldn’t sell their home to anyone who wasn’t white.”

Such pledges were called ‘covenants’ in the real estate business. Such documents were immoral and wrong. But they were also meaningless, until the government agreed to enforce them.

A homeowner might sign such a pledge, but then later decide to sell the house to a Black family anyway. The pledge was simply a piece of paper, and the homeowner could ignore it — until the government stepped in. From local zoning boards to the United States Supreme Court, the government supported, or at least failed to overturn, verdicts based on such pledges.

Only because of a powerful government could racism move from being a nasty sentiment to a truly dangerous reality. What if the United States had more fully embraced the concept of a ‘weak’ or ‘limited’ government? What if the government refused, or lacked the ability, to facilitate racism?

Anna Megdell, also at the U of M, explains how took these pledges, which were initially powerless expressions of sentiment, and turned them into concrete and damaging realities: “Over the years, these policies were enforced formally through ordinances and legal covenants.”

Professor Stephen Berrey, likewise at the U of M, has researched sundown towns and the practice of redlining. He notes that “these rules were embedded in” local “zoning ordinances.”

The foul and indecent practices of redlining and sundown towns continued, in some parts of the country, into the mid-twentieth century; in some places, past mid-century.

The principle at work is this: Racism is a shameful and immoral idea. It remains merely an idea until the government obtains enough power to tempt the racist to leverage that power in favor of racism. Where governments are weak and limited, they cannot enforce concepts like segregation.

It may seem counterintuitive to plead for a “weak” government, but it is precisely a weak or “limited” government which prevents practices like redlining from taking effect. The term “limited” is more palatable, and therefore more common, in such discussions.

When a government is limited, it cannot intervene in free market decisions. The majority of homeowners and the majority of real estate agents — perhaps even all of them — are interested primarily in money. When they are selling houses, they want to sell to the highest bidder. Instantly, race is no longer a consideration.

Imagine a person who has a house to sell. Two offers are made to this owner. One offer is for $500,000 and the other offer is for $600,000. Which offer will the seller accept? The higher one, naturally. The seller will not stop to ask about the race (or gender, or religion, or ethnicity, etc.) of the potential buyer. In a “free market” economy, practices like redlining and sunset towns disappear quickly.

It is only when the government has enough power to force the seller to ignore the obvious economic reality that racist policies can take effect.

Economic transactions in an unregulated free market are the most effective instruments for anti-racism. Societies which allow people to freely buy and sell have no interest in a customer’s skin color; they are only interested in a customer’s money.

When local real estate markets are freed from government intervention — when governments no longer enforce rules and pledges about a customer’s race — then redlining and sunset towns quickly disappear.