By The Center for Public Integrity

March 15, 2022

HOST: This document and all the history it holds is why it’s hard for ReShonda to open a bank in Waterloo.

It’s part of the wealth gap’s roots here.

I’m Jamie Smith Hopkins. From the Center for Public Integrity and Transmitter Media, this is The Heist.

The wealth gap is a national heist, a theft carried out through centuries of deliberate exclusion and discrimination.

You can see it across the country: in documents like restrictive covenants tucked away at county offices. In segregated cities like Waterloo. In the vastly different homeownership rates for Black and white Americans. And in the challenges ReShonda is facing raising funds to open a Black-owned bank.

You can boil all this history down to a single statistic: $11 trillion. That’s the estimated size of the wealth gap.

The wealth gap is a machine. It’s manmade, built and fueled by the U.S. government and helped along by other powerful institutions like banks.

Once this machine got going, it was self-perpetuating, stomping its way through U.S. history.

And as ReShonda tries to fight the wealth gap, the wealth gap fights back … with all this history and momentum behind it.

WILLIAM DARITY: I’m William Darity, known by many as Sandy. And I am the Samuel DuBois Cook professor of public policy, African and African American studies, economics and business at Duke University.

HOST: I reached out to Dr. Darity because he’s spent more than 30 years researching the wealth gap, looking at this powerful machine, piece by piece, and figuring out how those pieces fit together.

He says the U.S. government engineered this machine and gave it big boosts of energy, helping white families build their assets while making it difficult or impossible for Black families to do the same.

Dr. Darity makes his case like a prosecutor. He starts at one moment, after the Civil War, when people who were formerly enslaved were promised 40 acres of land. But only about 1% of eligible people got anything …

WILLIAM DARITY: … before President Andrew Johnson shuttled the entire land reform effort and restored that 400,000 acres to the former slaveholders. At the same time, the federal government had introduced the Homestead Act of 1862, which provided 160-acre land grants to upwards of one and a half million white families in the United States. A stunning foundation in terms of an opportunity to accumulate wealth. And this is how the nation settled the Western territories that had been taken from the Native populations. …

So that’s the beginning of the racial wealth gap, and it’s policy driven: The government provides land to white families and doesn’t do so for Black families.

HOST: For decades afterward, the U.S. government also allowed wealth to be stolen from Black families and communities — often violently.

WILLIAM DARITY: There was a wave of upwards of a hundred massacres that took place across the country … and these massacres involved not only massive loss of Black lives, but also the appropriation and seizure of Black-owned property by the terrorists — and the federal government did not intervene. It did not prevent this from happening. It did not provide any form of compensation to the victims. And in some instances, there was actual federal complicity from the standpoint of the provision of the arms that were used by the white mobs.

HOST: The 1921 Tulsa Race Massacre is one of the most significant examples. White mobs looted and burned a thriving Black business district and neighborhood — and murdered as many as 300 people. In the years after the massacre, the neighborhood was redlined.

During and after the Great Depression, the U.S. government was feverishly passing legislation, launching huge national efforts to help families build wealth.

The Federal Housing Administration and the G.I. Bill made it easier and cheaper for white Americans to buy a home. To grow their assets.

But the Federal Housing Administration excluded Black Americans. And the G.I. Bill left it up to banks to decide who got home loans. Black veterans, who had just risked their lives fighting in World War II, were often denied mortgages, effectively blocking them from the GI Bill’s massive homeownership program.

WILLIAM DARITY: And federal support for homeownership was critical in building what we now refer to as the new middle class. But it was a middle class that was almost exclusively white as a consequence of the discrimination that was exercised in the provision of these homeownership subsidies.

JAMIE SMITH HOPKINS: What you’re describing is a situation where it just keeps compounding, multiple policies over multiple decades, over and over and over. Correct?

WILLIAM DARITY: It’s a cumulative array of policies that have had effects across generations. So it’s multi-generational deprivation of wealth.

HOST: Once the wealth gap machine was built and the gears started turning, it was pretty much self-perpetuating.

People who had been given opportunities to grow their wealth could keep multiplying it. Profit from selling property or a home became money to put into the stock market or to start a business.

And the people who had been kept out of growing wealth kept getting shut out.

Even if you work hard or have a good income, so much American wealth comes from what’s inherited, from assets that have built up over generations. Wealth that’s been denied to generations of Black families.

How do you fix it?

How do you shut down a machine powered by centuries of calculated exclusion?