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Historian: How government policy created ghettos
Many black people still live in segregated ghettos in the country's metropolitan areas. Richard Rothstein, a research associate at the Economic Policy Institute, says those ghettos didn't happen by accident. - photo by Lane Anderson
Inner-city and suburban ghettos poverty-stricken neighborhoods that are hard to escape and often inhabited by immigrants and minorities are taken for granted as part of the American landscape.

It's easy to assume that they are a natural occurrence or were always there, especially if you were born in the 1970s or 80s when they became part of the national narrative on poverty. But historian Richard Rothstein believes that these neighborhoods are a direct result of government intervention in the private sector, specifically in real estate policies.

Rothstein, a research associate at the Economic Policy Institute, says that policies created in the 1940s, 50s and even 60s that most Americans have "forgotten about" created the ghettos of today.

"We have a myth today that the ghettos in urban areas are 'de-facto' just an accident of the fact that people don't have enough income to move into middle class neighborhoods," Rothstein says. "That's not how it happened. We had a system established purposefully by public policy."

Rothstein talked to us about his research on how government intervention created some of America's most impoverished and isolated neighborhoods. This interview has been edited for length and clarity.

You've documented government policies that deliberately created segregated neighborhoods. Can you give us some examples of how that began happening?

During the New Deal, the PWA (Public Works Administration) built housing in cities across the country as part of the economic program to provide jobs and housing. During that time, low-income workers had to live in urban neighborhoods to get to work at the factories, so Jewish immigrants, Irish immigrants and African-Americans lived in integrated neighborhoods. The PWA demolished those existing neighborhoods on the pretext that they were slums and built segregated public housing instead. I'm not suggesting those neighborhoods were fully integrated, but they were much more before the PWA got into it. This happened in Atlanta, St. Louis, the Bay Area segregated housing was created where there hadn't been before.

And this wasn't personal choice, or even the influence of real-estate professionals, but government policy?

That's right. You see that most powerfully with the Federal Housing Administration starting in 1940. The FHA guaranteed bank loans to mass production builders to make large subdivisions for white workers. One of the most famous of these was West Lake in Daly City in San Francisco, where the FHA built over 5,000 homes that working class families could afford, and the loans were conditioned on the builder promising not to sell homes to African-Americans, and even required builders to attach restrictive covenants to deeds so owners couldn't resell to African-Americans.

And this then created barriers to work for African-Americans?

Yes, absolutely. Take Levittown in Long Island, New York, one of the biggest and well-known FHA projects that built 17,000 homes in the suburbs. The FHA guaranteed loans on the condition that no homes were sold to African-Americans.

White lower middle-class families were lured out of the cities and into Levittown, where families could get loans and mortgages with no down payment, and the carrying charges were less than public housing, so they moved to the suburbs. And then industry moved to the suburbs, too. As factories moved, there were fewer jobs for African-Americans left in the cities, and federal law prevented them from moving to the suburbs, where the jobs were. This happened in every metropolitan area.

You say that in the 60s, the process of ghetto-ization was recognized by politicians, like George Romney, who tried to reverse this process.

This was once well known. In 1968, when Richard Nixon was president, he appointed George Romney Secretary of Housing. Romney began a program called Open Communities to force the suburbs to desegregate. Romney announced that housing policies had created a "white noose" around black ghettos that should be "untied."

There were protests in the white suburbs against Romney's program, and Nixon was trying to lure whites away from the Democratic Party, so he thought Romney's program was interfering with political strategy. Open Communities was abolished and forced out, and then we forgot all this history, and there's been no further activity since.

How did Americans come to forget this process, as you say, if it was well known?

Nothing I'm writing about is original; I'm just revisiting what every educated person knew 50 years ago. Forgetting has been a combination of willful ignorance and deliberately omitting this information from history books. I examined the most commonly used textbooks used in high schools, called "The Americans," published by McDougal. It's 1,200 pages long, and there is one paragraph devoted to segregation in the North and one paragraph devoted to segregation in the South.

There is one sentence on segregated housing, and it reads as follows: "In the North, African-Americans found themselves in segregated neighborhoods." There is really not even a glancing mention of housing segregation policy.

You note that from the 1930s onward, many working-class white people were able to buy new houses in suburbs like Levittown, while black people were stuck in public housing apartments. What have been the long-term impacts of that?

Decades later, there's an enormous gap between the grandchildren of one group and the grandchildren of another. Today, nationwide, African-American wealth is five percent of white family wealth. I would say that enormous difference is almost entirely attributable to that [exclusionary housing policy].

I showed that in the case of Levittown, for example, homes built in 1947 sold for about $8,000, or twice the median income, and today they sell for $500,000. Those families that bought in Daly City doubled their equity in the next two generations. American wealth today is primarily in housing.

So what are your recommendations for solutions?

One thing I always emphasize is that nothing will change if people dont understand the history before we start talking seriously, we have to re-educate the American public. As long as people believe that ghettos were created by accident, they're going to think that they can only disappear by accident. If people understand that they were created by explicit policy, they are open to understanding that the only way that they can be undone is by equally purposeful policy.
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