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“Racist” Zip Codes

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A new type of social engineering is poised to descend on American communities: diversity mapping and the rectification of any racial inequities the mapping reveals.

The campaign is meant to stamp out “geospatial discrimination.” The term refers to the fact that affluent neighborhoods tend to be dominated by whites and Asians. What government calls “protected minorities,” especially blacks, are relatively absent from such communities. To the Obama administration, their absence constitutes prima facie evidence that such neighborhoods are discriminating against protected minorities by denying them equal access to safe communities and good schools. The social engineering aims at rectifying the alleged discrimination through the use of law, policy, and tax dollars. It is a form of affirmative action for neighborhoods, and its stated purpose is to raise minorities up into the middle class where they can share in the American dream.

The opposite will almost certainly occur. Social engineering of communities will only perpetuate “protected minorities” as an underclass that relies on government to “succeed.” Entitlement programs, such as welfare, tend to cement people into a cycle of dependency rather than launch them into self-sufficiency. Meanwhile racial tensions will be created where none now exist because imposing racial quotas will damage neighborhoods in the same manner it has damaged higher education. That is especially true because many of the communities viewed as disproportionately affluent are likely to be working-class ones in which residents had to sweat for every inch up the economic ladder with no government assistance.

Minorities need the opposite of what is being offered. Laws, such as the minimum wage and licensure, that hinder them from entering the job market or the business world should be eliminated. Policies such as affirmative action, which brand them as unable to compete, should be shunned. Such policies have been called “the bigotry of low expectations.” The economic history of America reveals a clear pattern. Racial and ethnic groups rise from poverty when they are allowed to compete in a (relatively) free market and to assert their own economic control through vehicles such as small businesses and home industry. That’s why the children of 19th- and 20th-century immigrants became more affluent and better educated than their parents. If the Obama administration wants to protect minorities, then it should step aside.

On July 16 Department of Housing and Urban Development (HUD) Secretary Shaun Donovan delivered a speech at the 104th annual convention of the National Association for the Advancement of Colored People (NAACP). He claimed that blacks were being denied “choice and the benefits of full citizenship” by being denied access to the “strongest neighborhoods.” Specifically, they were underrepresented as homeowners and renters in the suburbs.

Donovan explained the first step in remedying the situation. In conjunction with the Census Bureau, HUD was “providing data for every neighborhood in the nation, detailing what access African American families, and other members of protected classes, have to … community assets.” Donovan pointed to HUD’s enhanced “enforcement techniques” through which the agency was initiating “investigations on our own without waiting for individuals to file complaints.” The enhanced enforcement tools include two anti-discrimination laws that were strengthened in early 2013: the Fair Housing Act and the Equal Credit Opportunity Act. It is now illegal for housing or home-credit policies to produce results in which minorities receive disproportionately less housing or fewer home loans than whites. It doesn’t matter if the housing and credit policies are race-neutral in content and in implementation. If the results are not racially balanced, then discrimination has occurred and civil rights have been violated. This is the theory of disparate impact, in which all that matters are the results.

The Consumer Financial Protection Bureau has expanded its staff in order to “map” every credit record by race and report back to HUD on whether it is racially balanced. The “diversity mapping” of neighborhood housing will identify similar sorts of imbalance or “geospatial discrimination.” Armed with maps, HUD intends to assist neighborhoods in understanding “integrated living patterns” and in overcoming “historic patterns of segregation.”

The actions being discussed include new rules requiring communities that receive federal funds to “affirmatively further fair housing” for minorities and to encourage suburban landlords to accept Section 8 housing vouchers, which the federal government gives to private landlords to subsidize the rent of low-income tenants.

Section 8 housing has been actively promoted in the suburbs for years. But the proposed new HUD program is a considerable acceleration. The Fair Housing Acts of 1968 and 1988 protected renters and home buyers from discrimination based on race, sex, disability, and sexual orientation. Those HUD policies used force unjustifiably to prevent exclusion of protected classes; the new ones demand active and presumably — sooner or later — the forced inclusion of protected classes. “Make no mistake, this is a big deal,” Donovan told the NAACP. “With the HUD budget alone, we are talking about billions of dollars.”

Who is likely to benefit?

The obvious answer to the question of who benefits may seem to be “the recipients of subsidized housing and privileged access to so-called strong neighborhoods.” But the obvious answer is often wrong.

Without dismissing the variety of motives that underlie measures against racism, it is useful to point out some political and economic advantages that diversity mapping offers to those in power.

Through Freddie Mac and Fannie Mae, the federal government controls a huge pool of foreclosed and empty properties. Many of them are unsalable and constitute a straight loss. If they were to be occupied by protected minorities, then the Section 8 benefits offered to occupants would turn the properties into moneymakers. Through taxation or inflation, the government could subsidize a sizeable portion of the rent while collecting the remaining balance from occupants.

Establishing a mutually lucrative relationship with private banks is also a possibility. Indeed HUD has formed such partnerships in the past. On September 1, 2010, HUD announced the National First Look Program, which is described as “a first-ever public-private partnership agreement” of its kind. The partners include federal agencies, local governments, “top mortgage lenders” and nonprofit organizations. The mission of the program was and is to offer members of the Neighborhood Stabilization Program (NSP) a “right of first refusal to purchase foreclosed homes before making these properties available to private investors.” (NSP members are eligible for federal grants to do so.) Banks are specifically mentioned in the announcement. NSP members are to be given “a brief exclusive opportunity to purchase bank-owned properties in certain neighborhoods so these homes can either be rehabilitated, rented, resold or demolished.” Thus, NSP members could buy houses with tax money, fix them with tax money, and resell them to private parties. Banks would benefit not merely from the influx of cash but also by maintaining their intimate and lucrative relationship with government agencies.

There are other and more subtle advantages.

Obama wants to alleviate the debt of impoverished cities, such as Detroit, but he needs to do so without passing another unpopular stimulus package. An effective approach would be to reverse a main cause of the cities’ debt: “white flight,” the migration of affluent whites from urban areas to the suburbs in order to escape the unpleasantries of city life, such as high crime and bad schools. The migration sharply reduces the tax base of cities and increases the percentage of remaining residents who are on welfare or who otherwise consume taxes.

Obama’s solution? In a National Review article (August 1, 2012), Stanley Kurtz of the Ethics and Public Policy Center observed, “Obama is a longtime supporter of ‘regionalism,’ the idea that the suburbs should be folded into the cities, merging schools, housing, transportation, and above all taxation.” One step toward achieving Obama’s goal is “to move the poor out of cities by imposing low-income-housing quotas on development in middle-class suburbs.” That would reduce the appeal of the suburbs and white flight. It means that the middle-class does not need to be lured back into cities such as Detroit; Detroit comes to them. Regionalism also places a greater tax burden on current suburbanites to support former city dwellers because the suburbs provide services such as schools and roads.

Electoral outcomes

Another political advantage is that redistributing wealth financially appeals to important parts of Democrats’ base, which are more likely to continue supporting Democrats because of it. Meanwhile, regionalism is a financial slap at the Democrats’ base of opposition because the more conservative suburbs tend to be strongholds of Republican sentiment and votes.

Moreover, through selective migration, Democrats could negate what is considered to be an electoral edge enjoyed by Republicans: namely, redistricting, i.e., the practice of redrawing the boundaries of electoral districts; it is often done to make a district overwhelmingly Republican or Democratic and so ensure that it votes in the “proper” House members. And Republicans have been accused of being especially good at redistricting.

Under the HUD program, however, the Democrats could simply move their base into Republican strongholds and so increase their own vote totals in that voting area. The tactic is particularly important for the 2014 elections, in which the entire House is up for reelection. Without a Democratic majority in the House and with the maintenance of one in the Senate, the gridlock of which Obama complains will continue to hinder his second-term plans. Some commentators consider the suburbs to be the key factor in those elections.

The HUD program also presses or forces compliance on a segment of the economy that is resistant to the Democrats’ agenda: landlords who do not accept Section 8 vouchers. Since a great many Section 8 recipients are black, landlords who refuse the vouchers are often regarded as racist. But their reasons for rejecting the government program may have nothing to do with race. For example, some landlords reasonably view tenants of any race who depend on federal subsidies to pay a healthy portion of their rent as high-risk tenants who may default on the remaining portion.

Moreover, Section 8 renters can put landlords at legal risk. A 2008 article in the New York Times discussed some of the problems that can accompany an incoming flood of low-income renters. For example, crime sometimes rises and frustrated police officers sometimes threaten to prosecute landlords for the bad acts of their tenants. The article led with the story of “Ms. Payne, a 42-year-old African-American mother of five…. With the local real estate market slowing and a housing voucher covering two-thirds of the rent, she found she could afford a large, new home, with a pool, for $2,200 a month.” Soon problems developed. “When her estranged husband was arrested, the local housing authority tried to cut off her subsidy, citing disturbances at her house. Then the police threatened to prosecute her landlord for any criminal activity or public nuisances caused by the family. The landlord forced the Paynes to leave when their lease was up.” In all probability, the landlord would have the same reaction had a white tenant presented him with the same circumstances.

Under the new HUD program, it is not clear that the aforementioned landlord would be able to require a Section 8 tenant to leave at the end of a lease without facing official accusations of discrimination and, perhaps, legal action. Thus far, the new policies have been vaguely stated.

As the economy continues to flounder, minorities are hurt most. They would not be damaged by the free market, which when allowed to work is overwhelmingly color-blind. They would not be harmed by equality under the law. Minorities suffer from social engineering, which may be launched with good intentions but end in doing them harm.

This article was originally published in the April 2014 edition of Future of Freedom.

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    Wendy McElroy is an author for The Future of Freedom Foundation, a fellow of the Independent Institute, and the author of The Reasonable Woman: A Guide to Intellectual Survival (Prometheus Books, 1998).