[ExI] How do we construct workable institutions and ethical behaviors?

[Jeff Davis]

On Sun, Dec 11, 2011 at 8:37 AM, spike <spike66 at att.net> wrote:

> Jeff, this is a perfect example of what I was referring to in the earlier
> post.  The banks redlining wasn't about racism.  It was about risk control.

Not buying it, Spike.  Risk control based on racism is offensive and
not to be tolerated.  There exist standards -- there used to anyway --
regarding qualifying for a loan.  Standards that are independent of
where you live.  When the banking industry red-lined a district, they
broad-brushed everyone living there and denied them access to services
on a racial basis.  Case by case would have been fair, the broad-brush
is discriminatory.  Their risk-avoidance motive is understandable, but
the standard mortgage qualification criteria would have take care of
that.  The intent may not have originated from racial bias, but the
result was racist and was at least partially enabled by an apologist's
easy indifference to racially discriminatory practices.

> They would loan to minorities in safe areas, they would refuse loans to
> non-minorities in redlined areas.  The banks didn't care what race the
> borrow was, they cared about the risk the borrower would get killed and the
> bank wouldn't be able to get their money back.  The politicians made
> redlining into a big racism scam, when it was never that.  It was about
> risk.  Banks had no problem with minority neighborhoods, but they avoided
> risky neighborhoods.  Two different things.
>
> Perfect example in this area: East Palo Alto, a classic example of a
> redlined area.  It was adjacent to crazy rich Palo Alto, Menlo Park,
> Stanford, Mountain View, Sunnyvale, but East Palo Alto was a damn dangerous
> neighborhood.  They had almost no cops, couldn't afford them because they
> had almost no tax generating industry in there.  I knew this because I did
> business with a scrap metal shop in EPA.  So it was very dangerous in there.
> Crime statistics prove that.  Of course banks didn't want to loan money for
> homes down in there.  Can you blame them?  They were accused of racism,
> because EPA had a lot of minorities, but businessmen are not automatically
> racist.  They want to control risk, and it was easy to see EPA was risky.
> Businesses couldn't get a toehold in there because the theft rate caused
> them to be unprofitable.
>
> What finally happened about 15 yrs ago IKEA went in there.  Since furniture
> stores generally are immune from theft, it made it.  That generated tax
> revenue, which allowed them to hire cops, which made it safer, which
> encouraged other businesses and banks to loan on homes.  Those who remember
> East Palo Alto from the late 80 to early 90s should go look at it now: you
> wouldn't recognize the place.  It has a Nordstrom, a Home Depot, Office
> Depot, a Best Buy, even a grocery store.  Hell they have a Starbucks there
> now.  It looks like a perfectly safe silicon valley town now.  15 years ago
> you took your life in your hands even going into the metal warehouse.  In
> 1992 EPA had 42 murders, which comes out to 173 murders per 100k proles.
>
> The banks' redlining EPA wasn't about race, it was about risk.  EPA has all
> these big rap stars that live there, Sean T, Scoot Dogg, perhaps Ice Dog,
> Canine Icicle, Frosted Dog Shit, plenty of others with some variation of
> "ice" and "dog" in their name, but that should tell you something in itself.
> As I understand it, the term "ice" in rap means murder.  Dog means something
> other than Bowser the family pet as well, but the point is that the local
> entertainers were urging their audiences to murder each other.  Imagine the
> banks reluctance to loan their money where such entertainers reside.
>
> That whole reluctance was turned into a red hot racism accusation.  Banks
> came up with an idea: create exotic derivatives to spread that risk, then go
> ahead and make the loans in the dangerous hoods.  Some banks went another
> route to combat the charge or racism: they loaned to minorities in safe
> neighborhoods.  The banks already knew the proles couldn't or wouldn't pay
> (that's what credit ratings are for), such as the see-through house down the
> street from me which had four people living there for over a year who had
> exactly no possessions and never did so much as put up curtains, which is
> why you could see through their house.  Then when those exotic derivatives
> eventually went bust, the bank was holding property which was still worth
> something.  The people moved out without even a moving van: they all four
> got into their four cars and drove away, haven't seen them since.
>
> The banking industry's redlining wasn't about racism, it was about risk
> control.  They were accused of racism.  But to falsely accuse of racism is
> racisim.
>
> spike

Spike, you know I love you like a brother, but this feels all too much
like white boy apologism.

None of which persuasively addresses the "they were forced" question.

Full disclosure:  I'm a racist.  No apologies.  I have zero use for
the American black ghetto culture.  Sure, they came from slaves and
have had a rough time.  They have all manner of thoroughly valid
explanations about how they got where they are.  But that's no excuse.
 Time for them to get over it, and get on with making something of
themselves.  Everyone's got their problems.

Best, Jeff