Predatory Inclusion: A Long View of the Race for Profit

NB: This post is part of a series in our Race for Profit symposium. Read all posts here.

K-Sue Park–

The ascending slope of our current housing crisis is a good vantage point from which to think about Keeanga-Yamahtta Taylor’s new history of the federal response to an earlier point of crisis: she gives us reason to reconsider the role of the state in historic housing inequality, and new tools for demanding systemic change from the government going forward. At its core, Race for Profit is a rich and dense account of the government’s effort to finally include black people in its New Deal homeownership initiatives after decades of redlining erupted in riots over – among other grievances – housing starvation. In a literature that has focused principally on the history of racial segregation and formal exclusion through redlining, restrictive covenants, and racial zoning, Taylor instead highlights “predatory inclusion” as a principle mode of the American real estate market.

By focusing on this dynamic and the public-private partnerships that enabled it, her critique of the real estate system runs to its very foundations. As I elaborate below, this analysis resonates profoundly with other patterns of the real estate market’s development over a long historical arc—in particular, the government’s reliance on energies unleashed by incentives for private actors to accomplish public goals, its elevation of businessgrowth over social provision, and the way that real estate value continues to hinge on the race of the people present in a place, and to rise based on white presence and white desire.

Taylor’s book begins with redlining, a practice that formed part of a New Deal housing initiative that radically transformed the landscape and the business of housing in America. While the government also created some limited—and segregated—public housing, at this time, it largely eschewed the public option in favor of building a private market to supply affordable housing. As we know, it refused to support non-whites even as it fueled the building boom that created the suburbs as white spaces, on the basis that the presence of non-whites depreciated property values and presented investment risk. To finance this project, the government relied on private lenders and investors, which it lured in by promising to insure their loans and by creating government entities to run a secondary mortgage market theretofore unprecedented in scale. Notably, these measures transformed what we might call the “production” of mortgages themselves: they laid the ground not only for standardizing the thirty-year amortized purchase money mortgage, now the bread and butter of home loans, but also the creation of a new kind of commodity in mortgage-backed securities (MBS), roughly a $9 trillion market today.

The story Taylor tells only grows more powerful as you step back historically. To connect this work with my own on the development of property in early America, I see this initiative– forging the standard residential mortgage as a new kind of commodity—as following a roughly 300-year period where the government’s main focus was converting indigenous lands into the enclosures that would create a real estate market in the first place. That effort, too, as I have described elsewhere, depended on distinct public-private partnerships and the federal government’s creation of entities to structure and manage incentives for private parties to settle– to “cultivate,” or dare we say, develop lands and raise their market value. Early “developers” justified their expropriation by describing non-white resident populations as lacking the capacity to care for the lands– as “savages” whose use constituted “waste.” Lands simply had no value as real estate without white presence and desire. Removal was critical to this project because nonwhites’ presence diminished that value.

By the time of the New Deal, the national landmass had been wholly converted into enclosures, and the creation of a new mortgage industry infused the real estate market with new life. It ensured that the primary commodity of land enclosures would keep moving on the market and that their movement would perpetually generate new commodities in mortgages and MBS. From this long view, the fact that the government’s mobilization of private forces to indebt non-whites resulted in racial predation was not surprising. By highlighting predatory inclusion, Taylor indeed aligns her story with the long history of indebting non-whites to extract land and wealth from them. That history begins with English colonists’ distinct strategy of purchasing land from natives, increasingly, over time, after deliberately indebting them. It continues with the ways that white people continued to transact in this predatory mode with non-white groups, to the extent that they “included” them in a common market, both as they sought to expand the national territory and maintain residential segregation within it. Beryl Satter gave us another chapter of this history in her groundbreaking description of the use of contracts-for-deed to sell houses to black families during the era of redlining.

Taylor’s book spotlights an extraordinary moment when the Civil Rights movement cornered the government into reckoning with its responsibility for redlining and general exacerbation of racial inequities that even the Supreme Court, in the housing case Jones v. Mayer, identified as “the badges and incidents of slavery.” By recounting how the government decided to offer FHA mortgages to black people after decades of depriving them, she describes the last time the government made any explicit attempt at redress for their economic, social and political degradation, which was also the first time since Reconstruction. After handing responsibility for filling the void of affordable housing to the private sector, however, the frenzy of racial extraction that ensued triggered waves of foreclosure on black homeowners and the program’s collapse.

Fifty years later, from the depths of another crisis marked by worldwide foreclosures, astronomical property costs, and a still yawning, growing racial wealth gap, Taylor’s story illuminates our predicament. First, the program’s failure became the government’s excuse from withdrawing from the role of social provisioning that it assumed during the New Deal. Second, it validated that withdrawal by retrenching to the racist view that black people deserved subpar housing and misappropriating the language of civil rights to celebrate “colorblindness” as the movement’s achievement. This book is about this nation’s rejection of the social welfare state and its turn to neoliberalism. But within the history of predatory inclusion, as Taylor makes clear, this abandonment of responsibility for racial equity meant the government’s re-embrace of racial predation– a primary mode through which it had constituted a historically white supremacist economy.

Little of the predation that Taylor describes in Race for Profit is unfamiliar. As a former legal aid attorney, it was chilling to read fact patterns decades past that might have been my clients’; contracts-for-deeds still proliferate along the country’s southern border, where I practiced, and elsewhere (a few years ago I noted with horror that such contracts were one candidate for securitization as the industry sought new market “frontiers”—before it decided instead to experiment with securitizing rental units and mobile home loans instead). Indeed, the deeply systemic nature of these patterns of innovation and recycling predatory techniques is Taylor’s point. But by presenting us with this history in which the federal government, at least momentarily, assumed responsibility for the persistent problems of housing shortages and rampant white supremacy, I understand her to highlight not only how we arrived here, but also the choices before us.

Popular discourse about what the federal government might do is open to a wider range of possibility than it has been for some time. We have, for example, a proposal for a Green New Deal on the table that includes a federal housing guarantee. This call to action directly addresses the federal government, which once openly confronted its role in creating the nation’s racially predatory housing system, and with some sincerity, we are to understand, tried, if weakly, to act. Taylor’s history underscores the urgency of the need for it to try again, but in a way that begins where the problem does—with the core foundations and assumptions of racial exploitation and value that undergird the real estate market today, then, and from its inception.

K-Sue Park (https://www.law.georgetown.edu/faculty/k-sue-park/) is an Associate Professor of Law at Georgetown.