 We really have a warped sense of return on investment and risk. We're constantly investing in things that ultimately, and this was exposed by the pandemic, that ultimately leads to worse death rates, worse economic outcomes, worse housing outcomes for people of color. And as demographic shifts, we're becoming a minority white country, you know, that calculus is just not going to hold up. I mean, it's putting all of us in peril, and I say this all the time, if we've learned anything from this pandemic, is that when our neighbors are sick, we are then vulnerable. This is Rob Johnson, president of the Institute for New Economic Thinking. I'm here today with my friend Andre Perry. He's a senior fellow at the Brookings Institution and the author of a book that came out, I think, quite ahead of the curve in May of 2020 called Valuing Black Lives and Property in America's Black Cities. It just seems like now everybody's immersed in what Andre was illuminating a little over a year ago, and obviously that book came out, so you were thinking about it well before that time, and a lot of people think about problems, but you seem to have a vision of what was causing these problems that now other people are locking onto. So let's start with what inspired you to write the book? What did you see on the horizon? And tell us a little bit about what you developed over the course of writing the book. Well, there's two major reasons why I wrote the book. One is I would go back home to my hometown of Wilkenburg, Pennsylvania, and I would visit the home where I grew up, and as the story was told to me as a child growing up, my mother at the time of my birth, she was poor, she already had a child when she was 15, had me when she was 17, and the story is told that there was a deal made between my maternal grandmother and the woman I call mom, her name is Elsie Boyd, and Elsie Boyd was an older matriarch in the neighborhood that took in kids, and a deal was made that she would take me in to this home, 13, 20, 11 in Wilkinsburg, Pennsylvania, and my brother came and then as I was growing up, she reared or informally adopted a lot of children. She took in between 12 to 15 kids at various stages. Some would stay a few weeks, some would stay a few months. I would stay until I graduated from high school. That home that we grew up in is worth so much to me personally, but when you look at the list price of that home, you could pick it up by agreeing to pay taxes on it, and comparably, homes across a nearby neighborhood are worth thousands of dollars more. So I wanted just to see the overall conditions that led to me growing up in that home and its impact today. When I started doing that, I found that my mom lived in areas that were redline. She lived in areas where there was urban renewal, where highway construction, in the case of my mom, it was actually the building of the civic arena that forced her to move to Wilkinsburg. There were a lot of things that happened in the past, and I forgot to mention one other thing that my father, who was born in Detroit, eventually became a heroin addict. He was probably abusive, and he died in a prison right outside of Detroit, Jackson State Penitentiary now known as Michigan State Penitentiary. And so also, when I looked at where he lived, he lived in areas that were redline, where highway construction forced him to move. They both, my mom and my father, were surrounded by racial housing covenants, and they couldn't leave. And so I just started studying the conditions and what I found after comparing home prices in black majority neighborhoods to those in white areas. And what I did, what my team of Jonathan Rothwell and David Harshbarger, we controlled for education, crime, walkability, all those fancy zillow metrics, because we wanted to get an apples to apples comparison between home. And what we found pretty much astounds that homes in black neighborhoods are underpriced by 23 percent, about 48,000 per home. Cumulatively, there's a loss of about $156 billion in lost equity. And you know, to put that in perspective, how big a number that is, $156 billion would have financed more than eight million four-year degrees based upon the average cost of a four-year public education. It would have paid for or financed more than four million black-owned businesses based upon the average amount of black people used to start up their firms. It would have replaced the pets in Flint, Michigan, 3,000 times over, covered all of Hurricane Katrina damage, and it doubled the annual economic burden of the opioid crisis. So my father, who was a heroin addict, if he lived in areas that the housing was market rate or the white rate, he would have had better infrastructure, better schooling, greater opportunity to go to college or start a business. And I say all the time that there's nothing wrong with black people that ending racism can't solve. When things go wrong in black communities, we blame the people and we don't look at the policies that extract wealth on the daily. So for me, what I'm working on and the meat of my project is to remove the drags of racism that throttle the growth in black communities. And that should happen. That if you remove these drags, you'll see people get greater equity, have a greater chance to go to college, greater chance of starting a business. And so that's the meat of the enterprise. And then there's one thing, and I'll just go through this briefly. When I was in education, I did a lot of work in education in New Orleans post Katrina. And I would hear this same retrain over and over again. They would say, if we could only fix the schools, everything would be all right. Not seeing that schools are connected to housing segregation and the way that finance leads to schools with predominantly black people and getting $23 billion less than their white counterparts. And so when people say, if we can fix the schools and ignore how schools are financed, then they're just bearing their head in the sand to the structural inequality that is really the problem. And so for me, it's an exploration of my hometown, how I grew up, my upbringing, but it's also just my effort to remove these drags of racism in markets, not just housing, but markets that affect the quality of life of black people. So it's fascinating to me because you're talking about essentially people acting as though these indicators are some kind of scientific objectiveness. And what value is subjective and psychological and based on, which you might call it many unconscious traditions and fears, as well as the number of acres or the number of stories or the number of bedrooms. And that interaction between the value of the house on the one hand, its ability to create what I'll call collateral to foster all kinds of things that improve the quality of life. And, which you might call the feedback that when those things aren't there, it depresses the way in which the house is assessed for that which is around it. Well, when you see this spiral, the only way it seems to me just listen to you, you can break out of it, is to get in to that subjective psychology and fear. Now, I remember when you and I have talked in the past online, but we just in conversation, you've mentioned to me that there have been some examples where white people are essentially put in the living room to sell the house or have the house assessed and just changing the artwork and the books on the shelf changes how people perceive the house. Yeah, you know, folks been reading the New York Times or I mean, many newspapers all across the country, there's been a recurring story in different locations of people who essentially are either trying to refinance a home, sell a home, and they get an appraiser. And whether they're in a black neighborhood or a white neighborhood, the original appraiser comes in very low and they suspect something wrong because they can look at how homes are valued right across the street and go, that doesn't line up with what just happened right down the street. And so many black homeowners have done their own sort of test case or social experiment. They removed the books, the artwork, and actually got white stand-ins. In one case, the white stand-in was a husband, so you had an interracial couple. In the first case, the black wife was there, was present when the appraiser came. And the second time around, the white husband stayed, and this is after removing all the artwork and books. And eventually, the second appraiser came in $140,000 higher or something around that. In the case in San Francisco, it came in $400,000 higher. In another case, in Indianapolis, $120,000 higher. And so it is really the very idea of a white savior that is taking place. And when you see a white person and you get a higher valuation, you're really seeing the intrinsic value of whiteness take hold. They see whiteness and somehow the property is miraculously hundreds of thousands of dollars more. Now it's clear that in my mind, this is almost theft, because when you're talking about losing $140,000, you're really talking about throttling a person's ability to start a business, to get another home, to pass on generational wealth. I mean, it's theft. But the one thing I don't like about the reporting on this is that it's almost focused on individual appraisers. And it says, hey, this is the problem of individual appraisers. No, this is also a function of structural racism. My research looks at the impact of the black concentration in a neighborhood and how that leads to wealth extraction in a systemic way. And as you put it, there's these cultural subjective practices that are really inhibiting wealth development. And I'll just be very clear about this. The price comparison model that appraisers use, when they compare a home within a neighborhood that's been discriminated against over time, you essentially just recycle the discrimination over and over again. And let's also be clear that 85% of appraisers are white. 75% are male. And we know that there is a connection between representation and outcome and all subjective types of exercises. And one more thing, and let's not forget the history, that the price comparison model was also a tool to keep black people out of neighborhoods. And so we clearly need new practices that are devoid of this tradition, because it's really just limiting wealth development and sometimes encouraging theft, in my opinion, when it comes to the value in the home. Let me ask, I'm thinking of what I might call comparative geography. Are there places where this phenomenon is extreme and other places where it's quite diminished, where essentially it's not profound? I'd be interested where we should live if we want to overcome racism, or if we're a black person, what's a place where you're going to get a fair shake? Lynchburg, Virginia, let me tell you, there's an 85% difference between equivalent homes in black neighborhoods and white neighborhoods, meaning if you helicopter a home from a black neighborhood and put it in a white one with similar social circumstances against similar educational levels, crime levels, it would increase in value by 86%, 85%. I mean, it's insane. And then on the flip side, you have places like Nashville, believe it or not, where it's a plus 10% value in black neighborhoods. Now, that is fraught because when we looked at the home ownership rates and other factors, it's a very older home owner in those neighborhoods. So clearly, those places are vulnerable to gentrification. But that's what's happening in most cases where you see prices of home, list prices of home so low that eventually only people with cash can buy them. I mean, your hometown of Detroit, for instance, there are thousands of properties priced below a point that a bank won't back with a mortgage. And so the only way you can acquire a home is through a contract. And there's no regulation between those kinds of contracts between a buyer and seller. So there's a lot of just unsavory practices going in on those things. But again, there are some places where home values are higher in black communities. And it tends to be in areas where there's higher black home ownership, anchor institutions like HBCUs, black home banks, or also government entities where there's a lot of, where higher rates of employment because we know a black people have a better chance of being employed, where there's lots of public sector jobs. And so there are some factors that tend to sort of increase value, but overall it's much more devaluation, as I said. And I use the word devaluation to put action on, so to say that, hey, there is a purposeful or disparate impact on the assets in black neighborhoods. They're being devalued. And part of my mission is to calculate that black tax, if you will, so that we can restore the value that's been extracted by racism. This is, how would I say, I think a tremendously important context that you're exploring. Are there international comparisons? We know that the, what you might call original scene of America, that racism was very profound. Do you see similar kinds of influence in marketplace outside the United States? Well, you know, I'll put it this way, because clearly in many different contexts in, at least in the industrialized world, that you see a lack of investment in black neighborhoods, in immigrant neighborhoods. And there's so many sort of these boards that are created to essentially determine value. And those boards or these organizations that set the value of various things, from homes to bond ratings to a number of issues, are steeped in racism. And so when I look at homes and communities that are persistently undervalued and were not invested in, you can also find similar bodies that have essentially deemed these neighborhoods unworthy of investment until white people move in. And then miraculously, there's a heightened value. You know, I mean, it's insane. I encourage people to go to the Brookings website, the devaluation of assets in black neighborhoods. It's a report that anchors my book, Know Your Price, Value in Black Lives and Property in American Black Cities. But the report, it can be found on the Brookings website. But you see as the concentration of blackness increases, the price decrease. And it's very linear. But the reverse is true. As the population of white people increase, or increase in a neighborhood, so does the value. And you know, it goes without saying, you're really seeing that intrinsic value of whiteness really appear or come out of the wash in the value of home. Last question on this kind of comparative theme. What happens to Latin communities relative to white communities, again, relative to the black community? Yeah, we're actually starting that research now. I will say this, I expect a similar phenomenon, but not the exact same thing. Because remember, it was anti-black policy that really shifted the systems in housing, employment discrimination in another area. It was really anti-black policy. And certainly, other people were caught up in that. We still see, for instance, home values in formerly red-lined areas generally lower than others in spite of the population in it. So that impact of redlining still has a drag on the communities, regardless of people who are in it. And this is something that we also found. Black people are no longer the predominant group in formerly red-lined areas. It's Hispanics than whites, then Blacks who live in those areas. And you see sort of worse outcomes in those areas, regardless. So I would venture to say that as brown people move into black neighborhoods and you're seeing this all over the country, their wealth is being robbed by those same anti-black policies overall. So I think you'll see a similar sort of devaluation, but I think that you'll see it more pronounced in black neighborhoods because it was anti-black policy that led to many of these practices that extracted wealth. So in this, what I'll call spiral or interactive amplifying loop, we see that the lower valuations diminish what might call the wealth power collateral upon which a more vigorous system can be built, educational institutions, small businesses, probably things like transportation opportunities for people who could reach out a little further to explore jobs that are more vibrant. If getting from here to there was easy to do, there are all kinds of, you know, what's the quality of healthcare clinics, all of these things which you've shared with me are, how do I say, intertwined with these valuations. I'm a doctor's son. I think the diagnosis that you have, you know, you might call excavated from your childhood and made systematic, it's things to me about the stuff I observed in around Detroit, suburban Detroit on the lower east side. But I'm a doctor's son, so the diagnosis is brilliant. But doctor, what's the remedy? How are we going to get out of this spiral? Where's the leverage point? You know, and I say broadly, nothing grows without investment. I'm with the Vietnamese philosopher and excuse me for mispronouncing the name, tic-tac-tun. Yeah, and one of my favorite quotes was, if you see ahead a lettuce and it's not growing, and I'm paraphrasing, you don't blame the lettuce. You look to see if it's getting enough water, if it's getting enough sunlight, if the soil's rich, you never blame the lettuce. But when it comes to black communities and development, we're constantly blaming the lettuce. And so we need to make sure the soil is rich. It's getting water. In other words, we need to invest in the infrastructure and the other surrounding things that will lead to growth. And so the remedy is around investment. We're not going to, you know, like the ultimate bad play on this is let's arrest people. Let's make the community safer by arresting people. And you're literally extracting people from the neighborhood, which makes matters worse. And so the ultimate, I mean, broadly speaking, is to invest in communities to remove these sort of air looms of segregation, these appraisal practices and other real estate practices that were prevalent during a time of segregation. We've got to remove these things and replace them with ones that are anti-racist, that encourage inclusion. And, you know, Rob, this is something that we've talked about in private. We really have a warped sense of return on investment and risk. You know, what we, what the horrible practice or tradition developed from redlining is that the homeowner, the federally backed homeowner's loan corporation, black neighborhoods too risky for investment, when in fact it was the segregated communities that imperiled black people long term. But when you look at interest rates, when you look at investment, it's, we're almost rewarding what's actually causing harm. And also we have to rethink what the return on those investments are. We're constantly investing in things that ultimately, and this was exposed by the pandemic, that ultimately leads to worse death rates, worse economic outcomes, worse housing outcomes for people of color. And as demographic shift, where we're becoming a minority white country, you know, we, that, that calculus is just not going to hold up. I mean, it's putting all of us in peril. And I say this all the time, that if we've learned anything from this pandemic is that when our neighbors are sick, we are then vulnerable. And that's true economically as well. It's not just a medical phenomenon. So we have got to invest in the people that have not been invested in. I mean, I generally study underappreciated assets, meaning if you just add water, it will grow. Well, the underinvested assets are in black community, they're in the black entrepreneur there is in black housing. And it's to ensure that people have stable housing could have an opportunity to buy a home to start a business. And so when we get there, we will enlarge in the proverbial part, I'll give you one, this quick example of that. Black people are up again about 14% of the population, but only 2% of the employer firms in the United States. If the employer firms match the black population, we would have 800,000 more black businesses in the economy, 800,000. Greater productivity, a greater employment, just overall more wealth in the system. And so in this regard, equity is stimulus. And so if we just invested toward that equity, you would see everyone benefit from that productivity. But we just don't see it that way because our work perspective of risk is so off. We don't see the true return that can come from those investments.