*The Color of Money*

by on September 18, 2017 at 2:08 pm in Books, Economics, History | Permalink

The author is Mehrsa Baradaran, and the subtitle is Black Banks and the Racial Wealth Gap.  Here is one excerpt:

Not only were black bankers stuck in a perpetual money pit, but they were often cast as the villains when thing went wrong.  That their loans went primarily to the black middle class and were out of reach of the majority of blacks sometimes made black banks the targets of criticism.  Abram Harris was one of these critics.  Harris was the first nationally renowned black economist and the first to do a comprehensive study of black banks, called The Negro as Capitalist (1936).  Harris headed the Howard economics department from 1936 to 1945, when he became the first black economist at the University of Chicago.  He was recruited there by Frank Knight…Harris had held Marxist sympathies while at Howard, but with his move to Chicago, his economic philosophy became more traditional.

Here is Wikipedia on Harris.  As for Baradaran, I found this to be “two books in one.”  First, it was an OK and useful but not original look at the evolution of the racial wealth gap.  Second, it was a very interesting but interspersed history of black banking in America.  Overall recommended.  Here is the book’s home page.

1 dearieme September 18, 2017 at 2:30 pm

What difference – at this point, what difference does it make?

2 The Other Jim September 18, 2017 at 3:28 pm

I enjoy being cuckolded.

3 rayward September 18, 2017 at 2:38 pm

I’m pleased to see Cowen’s focus on rising asset prices, in this case as the path for accumulating wealth among the black middle class. Of course, the message in this book as that the black middle class has mostly not benefited from rising asset prices as the black middle class doesn’t own any assets. As this book is about black bankers, it’s a story about using leverage to accumulate assets and to benefit from rising asset prices. Unfortunately, the black middle class is often the last to borrow and buy, which places them near the peak in asset prices before the inevitable plunge. Timing is everything, and the poor, especially the less educated poor, often have very poor timing. I wouldn’t blame black bankers for the phenomenon; rather, an economy, and the policies that support it, that relies on rising asset prices for prosperity.

4 mulp September 18, 2017 at 4:50 pm

Yeah, inflating the prices of old decaying assets does a good job of creating jobs 30 years in the past!

It used to be that inflating real estate prices led capitalists to buy farmland and then build trolley lines from the jobs to their land which they paid for buy selling the lots with and without housing for prices lower than the inflated prices of real estate near the jobs.

Or they used their political power to get politicians to hike taxes to pay for building transportation and water and sewer service, and making sure FDRs rural development funds paid for electric and telephone grids to be built.

The past economic theory has been replaced by the idea that owners of cottages needed to have their property taken and given to a luxury housing developer like Trump to increase the supply of housing, and create wealth by replacing 5 $500,000 cottages with 100 $400,000- $1,000,000 condos. After all, taking a dozen properties worth $2000 to build 500 low income housing units for working poor at rents of $50-100 a month was a terrible idea because it increased the density of poor families and increased to costs of schools.

(BTW, the housing redevelopment programs building high rise working class housing to replace “slums” was restricted to white protestants only. Blacks, browns, Jews, and often Catholics need not apply.)

5 Potato September 18, 2017 at 4:55 pm

You have a very strange aversion to land use productivity. And prices as a reflection of value.

I can’t tell if you’re making a legitimate swipe at eminent domain or if the rant is just sound and fury, signifying nothing.

6 It's just mulp September 18, 2017 at 5:27 pm

You’ll learn soon enough.

7 Potato September 18, 2017 at 4:51 pm

What, praytell, does a society look like that does not rely on rising asset prices ?

That sounds like a society with zero growth. Malthusian limit and zero productivity gains. The reason all the old religions banned usury, because when incomes don’t grow , borrowing money leads nowhere good.

Yikes

8 Ray Lopez September 18, 2017 at 7:44 pm

@Potato – there are two types of productivity: traditional productivity (‘dumb growth’) that comes from just having more people, and total factor productivity that comes from having the same number of people “work smarter”. The easy growth like in China comes from the first type of productivity (“moving farmers into the city where they get counted in Chinese GDP”). The harder type, TFP, is very hard to produce, and to do so you need better education, better R&D, better patents. You basically need people like me (and I’m retired). Due to the limits of ‘dumb growth’, aka ‘rising prices’ as you say Potato, French economist Didier Sornette has a model that predicts a hard reset to the world economy in the year 2050, as world population peaks. Set your watch and/or target fund…

9 MRU Student September 18, 2017 at 8:16 pm
10 Ray Lopez September 19, 2017 at 10:42 am

@MRU Student – lol! And if there’s no simple answer to patents, why does MRU, with no expertise in this field, offer one? Open your mind student. I realize you’re suffering from Stockholm Syndrome but you should at least consider your teachers are preaching from the wrong book. Tabarrok Patent Curve indeed.

11 cfh September 18, 2017 at 6:08 pm

A perpetual money pit sounds rather nice.

12 Dick the Butcher September 18, 2017 at 7:01 pm

Bankers, white or black, make loans with the intent of recovering the principal and earning profits from paid interest. In other words, from the movies: banks make loans to people that don’t need the money; the mob to those that do.

Excessive loan losses are the main causes for 99% of bank failures since 1933, when the FDIC insurance fund began insuring deposits and the FDIC, as corporation, began acting as receiver for failed banks.

Those principles are lost on Marxists and the academic apocalypse.

13 Steve Sailer September 18, 2017 at 7:20 pm

The problem of African-Americans is that they didn’t live in places of any intrinsic value. Blacks tended to live in places like Manhattan, Brooklyn, Washington DC, the Chicago lakefront, San Francisco, freeway close to downtown Los Angeles and LAX, etc.: obviously places of zero intrinsic value. Nobody could possibly expect to make money off appreciating property values in worthless spots like that: Tragic Dirt.

Today, the altruistic white people who are self-sacrificing by moving into places like Harlem and the part of Chicago’s Gold Coast where the Cabrini Green housing project once stood are trying to do all in their power to make sure that blacks feel absolutely comfortable moving out of these hopeless neighborhoods and going to places with far more Magic Dirt, such as Ferguson, Missouri.

When the Obama Administration sued Dubuque, Iowa for not being wholly enthusiastic about taking many displaced black refugees from the Daley and Emanuel Administrations’ demolition of Cabrini Green a mile from Chicago’s Magnificent Mile, Obama Administration officials such as Rahm, Bill Daley, Valerie Jarrett, and Penny Pritzker weren’t trying to crush Dubuque’s resistance it to make money for themselves and their allies in the Chicago real estate business, they were doing it to Fight Racism.

14 Ray Lopez September 18, 2017 at 7:52 pm

Sounds like you are slighting the white race Sailer? So you’re against gentrification of black neighborhoods as helping Whitey? That’s interesting. A few more steps in that direction and I see you have a promising future like the younger Abram Harris, as a Marxist…

15 A clockwork orange September 18, 2017 at 11:34 pm

we would make this house so rancid, as if Hazel meade were to ever visit, she would never want to leave. None of it. To divert her further and to restore her foul and incontestable nature. A bold and exceptional blend of design, function, and fabrication must be shaken. For Lady Hazel we do not desire any distraction or foreign war but rather a comfort, something rather, comforting perhaps, then together we can wait for her odor. Her foul odor that is well known on the streets of Johns Hopkins. Stay away she says but what she means consume me and envelope my senses with your tilt. your clarinet. your plague.

16 josh September 19, 2017 at 9:25 am

Not everything is about “who? whom?”

17 Anonymous September 18, 2017 at 8:00 pm

Once upon a time there were people who thought old Steve was about science, or even countering “hypocritical discourse on race.”

I wonder what made him blow up, abandon that guise, to go full Archie Bunker? Was it the failure of Breitbart and kidding-not-kidding racism to hold the government?

Or worse, does he think kidding-not-kidding racism still has a chance?

18 ladderff September 18, 2017 at 8:18 pm

Or worse yet: he’s just smarter, more knowledgeable, and less full of shit than you are.

19 Anonymous September 18, 2017 at 8:22 pm

Steve peddles his scraps to people who can’t read the science directly, or worse, want a racist thumbnail they know does not reflect the science at all.

20 Ray Lopez September 18, 2017 at 8:35 pm

@Anonymous – I agree but my 15 second read of the above shows a Limousine Liberal Steve Sailer, unless I misread him? He’s saying the black man in the USA is being given a raw deal by The White Man by being pushed out of trendy Harlem, NY and into Ferguson, Missouri?! PS–I think soon TC will sweep all these comments into the memory hole…but that’s my racist slant on Steve’s latest missive.

Bonus trivia: why does Anonymous always lose in chess? You see in chess game anthologies a game by a famous chess grandmaster against a hapless player named “Anonymous” and the latter always loses…

21 Anonymous September 18, 2017 at 8:45 pm

Limousine Liberal might be fair indeed.

It would be sad if he keeps Archie Bunker and loses the rest. I think the idea that these comments are self-refuting, and do not sweep along the ladderffs of the world is very sadly .. refuted.

22 Steve Sailer September 18, 2017 at 9:05 pm

Right. It’s impossible to understand the Obama Administration without grasping its roots in the long-running drive by Chicago real estate interests to cash in on gentrification by pushing public housing blacks out of the most desirable locations, such as the Cabrini-Green complex on the Near North Side (the demolition of which was finally completed in 2011): e.g., first chief of staff Rahm Emanuel, second chief of staff William Daley, consigliere Valerie Jarrett, finance chair and Commerce secretary Penny Pritzker, etc.

23 Steve Sailer September 18, 2017 at 9:10 pm

The Census Bureau announced last week that the black population of Chicago has declined by more than a quarter of a million since 2000 and blacks have fallen to the third biggest racial/ethnic group in Chicago:

https://www.dnainfo.com/chicago/20170914/near-west-side/census-white-black-hispanic-majority-minority-race-ethnicity-population-change-2016-2017-decline

24 Anonymous September 18, 2017 at 9:16 pm

“Make monocausal explanations for complex socio-political phenomena great again.”

(to borrow from Twitter)

25 msgkings September 18, 2017 at 11:49 pm

Steve is just Noticing(TM) what he wants to notice.

26 A clockwork orange September 19, 2017 at 12:20 am

ur a twat msgkigs

27 msgkings September 19, 2017 at 12:58 am

When the bot starts calling you names you must be doing something right.

28 josh September 19, 2017 at 9:34 am

In all seriousness, with which part do you disagree? That developers want to make money developing the Chicago lakefront, northern Manhattan, and Southeast DC? That to do that they need to obtain the property and replace the black population with a more white population? That developers, especially in places like Chicago are and really must be in order to operate very politically connected? That they use their political connections to obtain the aforementioned ends? That the black population has to go somewhere? That politicians at the federal level can and do prevent less powerful jurisdictions from using the same tactics that were used to drive the black populations out of Manhattan and Chicago?

29 Anonymous September 19, 2017 at 9:47 am

josh, you seem to be mixing government action and market forces pretty freely. That is enough to eliminate the “monocausal explanation.”

But of course there is more. We have had 50 years of social change (or at least some of us) changing the housing desires of many.

How many people left Chicago for a job in Houston or Atlanta? Is color even the biggest part of that story?

30 josh September 19, 2017 at 10:44 am

I’m not the one doing the mixing.

Did the denizens of Cabrini Greene leave for jobs in Houston? Is anyone even studying this internal migration of world historical significance?

31 Anonymous September 19, 2017 at 10:58 am

I think you lost your thread, josh.

If I see “complex socio-political phenomena” naming several drivers confirms my view that there isn’t an easy reductionist answer.

32 The Other Jim September 18, 2017 at 7:58 pm

Yes, Ty, let’s focus on the skin color of the people lending money.

Literally nothing is more important to the power of the US economy.

And please, keep pushing this as the Central Issue Of The Day, second only to the fact that Republicans are ruining the weather. This will be key to your Dem Tribe’s victory in 2018. Hop to it!

33 Anonymous September 18, 2017 at 8:07 pm

Tyler has recommended a number of books that I am not interested in. I just let that go by, because as I say, I am not interested.

I don’t get weird and say things like “please, keep pushing this as the Central Issue Of The Day”

(that might even indicate that you are interested, and agitated that other people might read a book)

34 Roy LC September 19, 2017 at 12:53 am

It is the curse of trying to climb out of poverty when you have a bunch of people around you convinced that you should support them. This id the sort of thing that keeps layaway and rent to own in business. Keeping any accessible savings is dangerous if you can’t say no and often the social penalty is too much to bear. I have wondered if this wasn’t one of the big reasons Katrina refugees who got themselves sent to BFE did better.

I long thought that if Banfield and Moynihan had figured this out their work would have been so much more useful, esp. Banfield.

35 ChrisA September 19, 2017 at 3:42 am

Would it be possible to have “black banks” nowadays I wonder – that is banks which restricted their depositors and loans to black people? I wonder if this would be seen as a good thing or bad thing – perhaps one of the SJWs could enlighten me on the currently allowed view. If it was allowed, this might be a good system for addressing black poverty, since a common meme is that white owned banks discriminate against blacks. The black economy is fairly large, so could definitely support a few of these banks. I would like to bet that their would be plenty of people willing to provide equity capital for such banks.

36 Borjigid September 19, 2017 at 9:02 am

I think that there are still a handful of black owned banks that primarily take in deposits from black people and make loans to black-owned small businesses. Not as the result of explicit restrictions, just a function of their target markets. Occasionally they get a favorable writeup in the liberal press.

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