Why Government Should Not Invest Public Money in Sports Stadiums Used by Professional Franchises
In the previous article, we have already come across some of the reasons why the government should not encourage funding of stadiums that are to be used by private franchises. We have already seen that the entire mechanism of government funding ends up being a regressive tax on the citizens of a particular city who […]
The Concept of Stock Keeping Units (SKU’s)
Companies like Wal-Mart are often credited with bringing in technology to the retail business. Prior to multinational companies introducing technology, retail was just a mundane business which was run without the use of any electronic or sophisticated retail systems. However, all that has changed now as retail is at the center of many technological innovations. […]
Seed Funding – Introduction
Creating a successful startup business can be a daunting task. This is because a startup business needs a viable idea as well as significant funding in order to be able to grow into a successful business. Now, viable business ideas often come to people who are deeply engaged with the work in their day-to-day life. […]
Money Market Reforms
The money market is interlinked with other markets such as the stock market and the bond market. As such, if there is turbulence in the money market, it often quickly spirals to other areas of the economy as well. This has already been in the 2008 global crisis. The liquidity crisis which greatly exacerbated the […]
Automation in Retail Stores
In the previous few articles, we have already studied the concept of automation as it related to retail warehouses. However, it is important to realize that warehouses are not the only place in the retail sector where automation is possible. Over the past few years, the usage of technology in the retail space has rapidly […]
America is a developed country and an inclusive society. It should ideally no longer face the problems of racism and social inequality and yet it does. It is no accident that a large number of poor and destitute consist of people from African American and Latin American communities. In fact, it is a result of some of the most racist policies that the world has ever seen. Even though these policies have been repealed decades ago, their effects are still very much alive. These racist policies were basically aimed at home ownership and were called “redlining”.
In this article, we will understand what redlining is and how it continues to affect the residents of America till this day!
It all started in the 1970’s when the United States government made a decision to develop the suburbs. This decision was made to accommodate the fast growing American middle class. As per this act, American government made access to credit easier for American households. However, which people received the credit would depend upon the neighborhood that they stay in. Neighborhoods which contained African Americans and Latinos in majority were designated as not being very credit worthy. They were marked with a red line to exclude them from the credit boom. As a result, this policy is known as redlining. In effect, this policy has created two economies within the same country. While one is bustling and full of opportunities, the other is severely underfunded. The government instituted segregation laws which made it impossible for people of color to obtain finance.
The situation was totally different in the Caucasian neighborhoods. Here, there was an abundance of finance at low interest rates. As a result, white Americans got more opportunities to invest in housing. The period saw a credit boom and housing prices went up. The net worth of Americans was largely tied to the house in which they lived. Since housing prices of redlined areas did not grow, there was a vast economic divide between the different races. People of color had to work extremely hard to break this barrier and propel themselves to economic heights.
Since the neighborhoods which were not redlined were wealthy, there was an abundance of economic opportunity in these areas. This led to the emergence of new businesses. The new businesses were also prospering leading to a rise in the economics of the area. The same was not the case with the redlined neighborhoods. There was nothing except poverty and hopelessness in these locations. This continued to be the case even after civil rights movement was successful. Even though the redlining was removed from government policies, the neighborhoods had already become so segregated that the African Americans did not have the money to move to a different location. Hence economic enforced redlining is still present even though state enforced redlining has been repealed.
College education is the number one indicator of the future earning potential of people in America. However college tuition is also prohibitively expensive. Colleges in America have a disproportionate number of white students. This is because their parents had invested in property during the redlining era. The properties have gone up in value. Hence, these parents can either sell their property or take a home equity loan to send their children to college. Once they have the college degrees, the cycle continues. White children continue to have more wealth which they can then pass down to their heirs whereas people of color struggle to pay the bills.
The percentage of African Americans and Latinos is quite small in most colleges. A lot of these students which are there have to pay for their education all throughout their lives since they have expensive student loans. The advantage that redlining has given the Caucasian community is still present till date.
Redlining has not only affected the college system, but also the school system in the United States. Since most of the neighborhoods are racially segregated, the schools are also segregated. To make matters worse, schools are funded with the help of property taxes. Property taxes are dismal in redlined areas. Hence, schools in these areas do not have even the basic funds required. There is a huge gap between the different neighborhoods when it comes to the quality of education that is being received by the students.
This is the turning point since most redlined neighborhoods see high levels of juvenile delinquency in their schools. These schools create anti-social citizens and criminals because they do not have the funds to churn out productive members of society. On the other hand, schools in Caucasian neighborhoods have the money to ensure that their students have the proper coaching and vocational guidance. This makes them much more likely to succeed as compared to their African American peers. The property values of a neighborhood therefore have a direct bearing on the schooling system in place as well!
To sum it up, redlining has been a disastrous policy. This state sponsored policy has led to racial segregation and division of wealth. Even though the policy has been repealed, more measures are needed to mitigate the disastrous effects it has left behind during its existence.
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An Overview of Contracts and Why They are Important to Business and Society
February 12, 2025
