I wanted to remark on the White House’s plan to “build black wealth and narrow the racial wealth gap”. The plan consists of two facets
- Address racial discrimination in the housing market
- Increase federal contracting with “small disadvantaged businesses” to the tune of about and additional $20 billion per year
I agree that the former continues to be an issue. The most recent study of which I’m aware found that black couples and white couples, on paper identical other their race, fared differently with lenders. I’m skeptical that the latter will do much. The track record of city racial set-asides has been quite mixed and in general has largely been a subsidy to people who didn’t actually need a subsidy.
The devil, of course, is in the details. Is “inequity” in home valuations a form of discrimination or is it just the working of the market?
And there’s also the caveat that there’s no telling what the final legislation will look like once it has been passed through the Congressional meatgrinder.
Finally, unmentioned in the White House’s “fact sheet” is another fact. At every income level American blacks consume a higher proportion of their income than corresponding whites, saving and investing less. There is a behavioral component in wealth that should not be ignored.
The root of the problem is IQ, which is 80% hereditary. The mean black IQ in the US is 85. The white average is 100. That means that while half of all whites half IQ’s above 100, only 10% of blacks do. That simple fact explains almost all the disparities in outcome.
So how do you “help†25 million blacks who have no economic role in modern society? There is no solution other than subsidies, basic incomes, social services. And heavy policing.
The future was fixed in 1619. There’s no escape, no cure.
I am kind of shocked at the direction Biden has chosen to go on race issues. There are more white people living in poverty than nonwhites. The big tent political approach is not to racialize these issues, which studies have shown diminish broad popular support. In the Civil War elections (or at least in the momentous 1864), Republicans argued that they were freeing both the white and the black Southerner.
including among blacks.
“………that black couples and white couples, on paper identical other their race,………”
I’d like to see that study. I’m suspicious of “identical” and whether the single best indicator of creditworthiness is even included.
“Is “inequity†in home valuations a form of discrimination or is it just the working of the market?”
I assume that’s a rhetorical question.
“At every income level American blacks consume a higher proportion of their income than corresponding whites, saving and investing less.”
I was unaware of that, but that would be a dominating factor in wealth accumulation.
I posted on it a long time ago. I’ll see if I can dredge it up. Education, jobs, experience, income, assets, ages, residence, location of property, amount to be financed, etc.—all identical.
I first heard that from a black financial planner who produced evidence that supported it.
PD Shaw has a very good point. There are as many, or more, whites trapped in poverty, and again for much the same reason, low IQ’s (<85). Are they not also deserving of some attempts at wealth building? They, like their black counter parts, also survive on welfare, and they are victims of a drug culture.
The overt, in-your-face racism of the Biden administration is simply stunning. We haven't seen this kind of bigotted, hate-filled government since the KKK was winning elections in the 1920's in the Midwest or since the Jim Crow era in the South.
The administration certainly seems to think that African Americans, if given the right incentives would adopt white (not capitalized, correct?) culture and prioritize building home equity.
I disagree because it’s my observation that status comes before equity within this group.
But elections have consequences and I suspect a lot of money will be thrown away and no lessons will be learned, or at least acknowledged.
Not generally cited, since things like income and assets, or loan to value, are viewed as the primary determinants of creditworthiness, is a prior history of repaying debt. Its number 1. If the study doesn’t include that its not an identical history. It could be, but if not included its a glaring omission.
Separately, as noted elsewhere, class is probably more important than race.
I agree with @Drew. Getting a mortgage is about numbers. Credit score, house value, loan amount, loan-to-value, income, payment-to-income, downpayment, etc., and the only subjective number is the assessment value. Interest rate is a function of credit score, points, and loan type.
As long as a mortgage can be collateralized, they will lend to anybody with a pulse.
The small business loan study with paired partners.
https://nextcity.org/daily/entry/mystery-shopper-experiment-racial-discrimination-small-bussiness-lending
@steve
Nice try. As usual, you change the subject. We are discussing house mortgages.