Ferguson and the Vicious Cycle of Looting in America’s Cities

Chris Ladd is a longtime Republican political volunteer from Texas now living in Chicago.

How did Washington DC’s Anacostia neighborhood become a festering slum and why has it become trendy again? What can that cycle tell us about events in Ferguson, Missouri?

Almost sixty years after the murder of Emmitt Till we continue to murder young black men for reasons we barely understand and seem powerless to stop. We are in broad, national agreement on our desire to free ourselves from racism, yet racist ideology still distorts our best efforts at political and economic progress. Only by confronting this history and recognizing its continuing hold on our culture can we neutralize it and move on.

Blight-ridden stretches of our inner cities are being restored to their former splendor, but those burned out hulks have a crucial story to tell. Before the last crack house in Chicago’s West Town becomes a yoga studio we should stop to bear witness. The history of these troubled battleground neighborhoods holds clues that could help us understand our illness and its cure.

Picture if you will, a thriving working class neighborhood in a busy northern city. The year is 1950 and the Supreme Court has recently struck down deed restrictions that block African-Americans from purchasing homes in this neighborhood. An opportunity looms. Someone is going to seize it.

Black neighborhoods are severely overcrowded due to a history of racist restrictions and informal practices that prevent them from buying outside their neighborhoods or building new ones. The most affluent black families are ready to take advantage of the new opportunity, but banks still will not lend to them and very few realtors in white neighborhoods will broker a sale.

A new business model emerges. It requires a very small capital investment and a nasty streak of cynicism. It works like this.

First you purchase a home in a white neighborhood and resell it to a black family. The black buyer is forced to buy the home at a steep premium, sometimes referred to as the “black tax,” necessary because their access to brokers and capital is blocked.

Since banks will not finance the transaction, the seller can further profit by self-financing. The black family regularly brings a 10-20% down-payment, but they do not receive a conventional mortgage. They obtain no ownership interest and gain no equity in the property until (unless) they complete their 30 years of mortgage payments on time. They have no access to foreclosure protections or redress beyond what is available to renters.

If that’s where the grift ended then the story of African-Americans’ progress into the middle and upper classes might be completely different. We would recall a tough, but generally successful climb against long odds as a formerly oppressed group made their way into the American mainstream. That’s not where the grift ended.

There was good money to be made helping the most affluent black families find new homes in better neighborhoods. There was spectacular money to be made by extorting those vulnerable families, shaking down powerless low-income white families, and converting successful working neighborhoods into smoking holes of blight, crime and misery.

After moving one successful black family into a financially precarious new existence in a white neighborhood, the grift entered a new phase often called “blockbusting.” With the arrival of a black family on the block, nervous whites worried that blacks would ruin their neighborhood. The blockbusters worked hard to exacerbate and capitalize on those fears.

In some cases they would hire African-Americans to walk the block, dressing and behaving in ways meant to feed cultural stereotypes. A poorly dressed black woman would walk down the sidewalk with several crying children. A black man would cruise the street playing loud music. The blockbusters would then go door to door at the white homes explaining that black families were moving in and making low-ball offers for their houses.

What followed was a kind of Dutch auction for the remaining homes on the block. Whoever responded to the racist appeal first got the best price. As the process continued prices of white-owned homes on the block would plummet. White families faced a stark choice. Get out fast or see your investment in your most valuable asset ruined. As the process peaked, there are examples of brokers buying an undervalued home from a terrified white owner for $10K and selling to a black family for $25K in the same week.

Ironically, the black families moving in were the most educated, affluent and successful members of their communities. Generally, they were far more educated and accomplished than the people they were replacing. That dynamic wouldn’t last long. As the grift continued it exacted a toll.

Black families with no opportunity to gain justice through the courts and few economic options poured every available resource into a desperate bid to gain access to solid neighborhoods and schools for their children. Some would survive the machine of piracy and exploitation into which they were being fed, but they were the exceptions.

If they were able to make their very steep payments, they would soon be presented with “code violations,” which would render their homes legally uninhabitable if not repaired. Often these were outright frauds. In other cases they were organized in collusion with local authorities in a misguided effort to stop the blockbusting. Families that had strained and borrowed to the very limit had few resources available to deal with any eventuality. Repairs faltered. Both spouses took multiple jobs. The fabric of a vulnerable community unraveled.

Default rates were high. With no legal recourse, black families consistently lost their homes along with capital carefully accumulated across multiple generations. The broker simply removed the family, retained for himself whatever equity had accumulated and repeated the process.

By the mid-‘60’s the prime opportunity to profit from this scheme had passed. Most of the black families with enough resources to be looted had been looted. In the turned neighborhoods, a few survivors kept making payments and working hard to hold their homes. The rest had reverted to being renters, sometimes in the very same home they had originally “purchased.” Remaining properties that could no longer be flipped to vulnerable buyers with a little money became slum rentals or were often simply abandoned.

By the mid to late ‘60’s when the Federal government finally intervened to give African-Americans protection from housing discrimination this cycle had largely completed. Discriminatory lending practices still would not be outlawed for another decade. After they were finally barred by law, discriminatory lending would still linger in practice for at least another decade and a half.

Chicago’s Lawndale with its beautiful stone mansions was by the ‘70’s a dangerous ghetto. Black families who invested their savings in the neighborhood were once again trapped in a slum. The accumulated wealth of an emerging generation of black elites had been systematically and legally looted.

The working class whites targeted in the scheme had lost their communities and much of their savings. A Saturday Evening Post article from 1962 poignantly describes their experience:

Some white owners simply stare, almost dumbfounded, as we draw up sale papers for them. Others break down and cry. Some say, “It’s OK to show the place to Negroes before we move, but we don’t want to be in the house to watch it when you do.”

What little protection they enjoyed came as a perk of their racial identity. Being white did not save them from extortion, but it gave them the opportunity to start over in new suburban communities with access to legitimate financing, legal protections, police support, and full public capital for schools, parks and libraries. A financial reversal caused by blockbusting was often compensated over time with appreciating suburban home values.

Lessons were learned. Those with the keenest ear for a racist appeal suffered and lost the least. In a great American irony, working whites’ experience of being victimized by their own racism and by the racist exploitation of their black neighbors actually reinforced and hardened their racism.

When they returned to visit the neighborhoods they had left, their eyes told them that their prejudices were valid. As those neighborhoods burned in the late ’60’s, whites congratulated themselves on their inherent superiority. After all, as was so often said, what kind of people would “burn down their own neighborhood”? A racist assumption filled the gap in whites’ understanding. If black families would just work as hard as “we” did, their neighborhoods would not be burning.

Aided by the slightest compassion or curiosity, those white families might have discovered that black residents by that time owned virtually nothing in those neighborhoods. Everything around them from the homes to the liquor stores was part of an infrastructure engineered to extract every penny they earned before it could be converted to capital or power. Looting that occurred in the riots of the ‘60’s was as much a metaphor as a reality, the only avenue by which African-Americans could participate in a legal and economic model constructed for organized extortion.

The entire cycle would be repeated in a refined and far more sophisticated form in the subprime lending boom of the early ‘aughts. Once again, black families who had managed to accumulate a little capital were systematically looted, leading to a broader economic meltdown. As in the ‘50’s and ‘60’s, none of the perpetrators would be prosecuted because the process was entirely legal.

Today in places like Brooklyn, Washington DC, Chicago and elsewhere, white residents are taking advantage of depressed prices to move closer to a newly vibrant urban core. Many of these white residents see themselves as progressive pioneers, converting swaths of burned-out ghetto into gleaming urban playgrounds.

Victims and survivors of a generation of racial extortion are displaced as the process comes full circle. Elaborate beards and skinny jeans are to them what a black woman with a crying baby was to a previous generation of white residents. Black residents priced out of what’s left of their homes rightly see the new influx as the final step in a cycle of exploitation. A vicious circle is closing. Now that their neighborhood has some renewed promise it’s time for the black survivors to get out of the way.

They are shipped off to suburbs like Ferguson, Missouri that are the suppurating new focus of American poverty, where struggling blue collar whites will once again greet them as a portent. Their influence is contained through aggressive, discriminatory police tactics, their little accumulated wealth siphoned away by selective law enforcement and political tactics designed to dilute their influence.

Ferguson is the depressing postlude to blockbusting. The wheel keeps turning.

Young white progressives ignorant of the process that turned Chicago’s Near North or DC’s Anacostia into slums, react with righteous frustration to the hostility of black residents. Similarly, a thin, emerging class of successful African-Americans whose families narrowly survived the urban meat grinder sometimes look back on those whose families were destroyed with a complex blend of emotions.

A lucrative new niche industry has emerged for black figures willing to cast themselves as Horatio Alger, confirm white racist stereotypes, and help Americans hide from our past. They assure audiences that America has no obligation to blacks. After all, if Dr. Ben Carson can become a surgeon then any African-American could be just like him if they would stop wearing hoodies, pull up their pants, and speak properly. Insult is added to injury as blacks are told to take “personal responsibility” for the wholesale expropriation of their capital and the disintegration of their communities.

History denied is history repeated. America’s great Achilles Heel is her racial mythology. The damage has never been limited to the black community, yet we relentlessly resist an honest reckoning. Over the last half-century we have very nearly exhausted the capacity of legislation to combat our own racism. Younger Americans are less invested in the myths of white supremacy that define the shape of the world for older Americans. Yet, judging from the shape of the arguments over gentrification, they are only marginally more aware of our history and its continuing impact.

Truth is powerful. Perhaps we can muster the courage to confront our history honestly and honorably, and thereby begin to escape the political distortions created by lingering racism. Our national debate over the murders of Michael Brown and Trayvon Martin might offer glimmer of hope. By openly wrestling with the demons of our past we might begin to recognize their fingerprints on our present and break their hold on our future.

Resources:

The Saturday Evening Post, 1962, Confessions of a Block-Buster

Edward Orser, 1997, Blockbusting in Baltimore

The Atlantic, 2014, The Case for Reparations

New York Times, 2014, In Ferguson, Black Town, White Power

The Atlantic, 1972, The Story of the Contract Buyers’ League

#####

About the Author: Chris Ladd is a longtime Republican political volunteer from Texas now living in Chicago. He has served as GOP Precinct Committeeman in DuPage County and worked with numerous Republican campaigns and PACs. He is concerned about the party’s drift toward the extremes. Chris also writes a blog on the website of his old hometown newspaper, The Houston Chronicle