Of all the manifestations of crony capitalism in American history, none is more sickening than the concatenation of racial prejudice, business greed and big-government protection that segregated urban and suburban housing during the 20th century.
Solicitous of, and sympathetic to, the fears of their white customers, builders, bankers and real estate agents went to enormous lengths to herd blacks into ghettos when they began to migrate north and west from the rural South during World War I.
Local courts enforced covenants forbidding white home buyers to sell or rent to African Americans (or, often, Asians and Jews). Prior to World War II, the real estate business actually considered such provisions ethically necessary to protect property values from the impact of what the federal government called “inharmonious racial groups.”
That last phrase appears in the original underwriting manual that the Federal Housing Administration used to ensure that nearly all mortgages it backed went to whites living in white neighborhoods. The New Deal agency actively encouraged racial covenants from 1934 until 1948.
By then, though, “residential segregation [was] deeply ingrained in American life,” as a 1973 historical review by the U.S. Civil Rights Commission put it.
Thanks primarily to the Fair Housing Act of 1968 and other reforms, as well as the rise of a black middle class and immigration from Asia, Africa and Latin America, the divide between black and white neighborhoods is not nearly as absolute as it once was.
Still, in 2010 the six metropolitan areas with the largest black populations scored nearly 80 points out of 100 on a widely used statistical index of racial segregation, according to census data.
Which brings us to Wednesday’s oral argument in the Supreme Court. Texas fair housing advocates sued that deep-red state’s housing agency for allegedly distributing federal tax credits for low-income housing in a way that steered the advocates’ black clients into mostly black neighborhoods. The Texas state government lost in the lower courts and appealed to the justices.
In a narrow legal sense, the court must decide whether the Fair Housing Act permits such lawsuits, based on the alleged “disparate impact” of business and government decisions, as lower federal courts and the Obama administration’s regulators have previously ruled — or whether plaintiffs must meet the much higher burden of proving deliberate segregation.
In a broader sense, though, the question is how active Big Government should still be in the fight to undo the residential segregation that Big Government did so much to create.
The justices are surely aware that the Supreme Court, alone among the three branches of the federal government and the states, consistently stood against housing discrimination. In 1917, the high court struck down openly racist zoning laws that decreed where blacks could and could not live. When racial covenants arose as an alternative, the court voided those as well, albeit not until 1948. In 1968, the justices bolstered the Fair Housing Act by ruling that housing discrimination violated a Reconstruction-era civil rights law.
To be sure, disparate-impact suits are a blunt instrument, especially in an increasingly diverse nation whose housing market is more complex and, thankfully, more data-driven and transparent, than in 1968.
In Wednesday’s argument, Chief Justice John G. Roberts Jr. was not wrong to note the inherent murkiness of the disparate-impact concept: It could be invoked against subsidies to revitalize a predominantly black neighborhood, on the grounds that they reinforce existing segregation, even though the money plainly benefits black residents.
Roberts suggested that courts might have no choice but to remedy disparate impact by allocating housing according to de facto racial quotas, which would create problems, constitutional and practical, of their own.
Federal goals and targets for subsidized lending helped many low-income people, who are disproportionately minorities, buy houses — but also induced many people to take on more borrowing than they could handle, with ruinous consequences.
Let it never be forgotten, however, that prior to 1968, housing was allocated according to rigid racial quotas, de facto and de jure, that systematically disadvantaged minorities.
Measured against the mass of historical housing segregation, disparate-impact cases are notable not only for their bluntness but their relative weakness. Justice Stephen G. Breyer had a point when he said they have been around for 35 years “and all the horribles that are painted don’t seem to have happened or at least we have survived them.”
When you look at it that way, the stakes are rather low — too low, you would have thought, to justify Texas’s investment in the case at a time when the Republicans who run that state, and others like them, say they want and need to engage minority voters.