One last parting note about this poorly conceived hit piece which attempts to lay everything at the feet of black pathology and dysfunction. It’s wrong in every way. I’ll cite some sources which may helphttps://quillette.com/2018/07/19/black-american-culture-and-the-racial-wealth-gap/ …
Exogenous or endogenous, though? Do tax dollars tend to redistribute money from big cities to burbs? The mortgage interest tax deduction theoretically does, but urban landlords can deduct their interest, too, so that’s a wash unless multifamily property owners are less levered.
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Not a wash if (1) the deduction is a function of the amount financed (the home price) and (2) if the public goods distributed are unequally distributed.
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That’s what I’m getting at with the leverage question. Adjusted for risk, are single-family owners more levered than landlords? (Keeping in mind that home price appreciation reduces leverage, so over time suburban owners get less levered, inner city landlords more)
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That’s a great question. I defer to
@leah_boustan on this as she’s the expert.
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Another subsidy is highway construction, which led to greater suburbanization and created jobs held disproportionately by whites.
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I think the crux of the issue is whether suburbanization was an exogenous thing that reduced property values, or if it was the result of white city-dwellers expressing a strong/expensive preference not to have black neighbors.
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Because in the latter case—without endorsing the consumer preferences—you’d still treat neighborhood racial composition as an externality, and the question becomes: who should optimally bear the cost of that externality?
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I think that framework is problematic. The racial composition of a neighborhood being an externality can only come about via irrational preferences via race itself.
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We get into very tricky territory when we start deciding which preferences are irrational. Especially in a majoritarian system. Jim Crow, after all, was just society’s way of saying that a preference for desegregated lunch counters was irrational and thus invalid.
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A much safer truce is to say that we don’t understand one another’s preferences, but won’t judge some of them invalid (assuming they don’t impose externalities, natch)
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Incidentally, the phenomenon of “block-busting” (and resistance to it) both imply to me that the graph is steeper when a neighborhood goes from 100% white to less. Which would imply that most of the property depreciation cost *from neighborhood composition* was borne by whites.
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The later cost—ie longer-term price depreciation after neighborhood composition changes—is, of course, borne by black residents. But in that case, it’s important to describe what causes this lagged effect.
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