Why Is Elmhurst White?

Something remarkable happened in the Chicago suburb of Elmhurst on June 13th. Well over a thousand residents gathered for a Black Lives Matter protest, carpeting the town’s Wilder Park with a massive, mask-wearing crowd. Nothing like this has ever before been seen in this quiet, affluent, almost entirely white town.

By contrast, a counter-rally anchored last week by the former Elmhurst Mayor and current County Board member, Pete DiCianni, was a pathetic spectacle. A few supporters turned out at the town’s police station, challenged by several local Black Lives Matter protestors. When he received an email from a constituent expressing concern about the rally, DiCianni replied in childish frustration, “Go stick your vote up your ass. I stood up for my cops today.” He faces a censure motion at the July 14th County Board meeting and a dim political future in this rapidly changing suburb.

As scenes like these play out in suburbs all over the country, it feels like the ground is shifting beneath our feet. However, behind the public expressions of anti-racism lies a contradiction we seem reluctant to address. Speakers at the Elmhurst event landed blows on all the usual woke punching bags from colonialism to predatory policing, but no one asked the most obvious question raised by looking at that sea of faces – Why is Elmhurst white?

If Elmhurst is willing to turn out in such numbers to support the concept of racial justice, why is the town also so intensely segregated? How can a community be, at the same time, welcoming toward other races and closed to them?

Though the rally attendees certainly don’t represent the attitudes of every resident, they do seem to reflect the tenor of the community, as demonstrated by the sad turnout for the counter-rally at the Elmhurst Police Department. Across its history, Elmhurst has never carried the sundown-town reputation of other suburbs like Naperville or fostered any prominent displays of racial animus. The town even hosted a packed lecture from Dr. Martin Luther King in 1966, arguably at the peak of his regional unpopularity.

Elmhurst was once solidly Republican in that boring, Chamber of Commerce way typical of affluent Northern suburbs, but as the national GOP took its hard turn toward white nationalism Elmhurst leapt off the train. Obama was the first Democratic Presidential candidate ever to carry the area. Eight years later, Trump barely reached 30%. Suddenly, across the span of a single decade, the entire area has switched parties, represented now by a slate of new Democratic officials at every level except for a few remaining dinosaurs like DiCianni sitting on the county board and city councils. Elmhurst is not the kind of place that rewards noisy displays of white nationalism.

For generations this was a community relatively free of overt racism which was simultaneously closed to black residents. How? Why is Elmhurst today every bit as racially segregated as it was in our grandparents’ time?

It’s a lot easier to paint signs and march around town than it is to confront the thorny challenges of systemic racism. Displays like the June 13th march in Elmhurst should be a seen as beginning, not an end. If we want to convert the hope and goodwill we saw in Wilder Park into meaningful progress on civil rights, we need to understand why Elmhurst is white.

When we think of racism as an attitude of the heart rather than as a complex embedded system, that scene at Wilder Park seems confusing, and almost all of the energy spent fighting racism is wasted. That contradiction between the will toward equity we saw on display and the racist outcomes unfolding all around us only makes sense when we understand racism as a system.

Imagine that nasty, bigoted racists built a machine designed to sort people by skin color, extracting value from black and brown people and redistributing it to whites. Further, suppose that generations later, white people decided that the bigoted attitudes which inspired the machine were dumb and counter-productive, and rejected that racism. Great. Now, what if they failed to unplug the machine? What if they forgot it even existed?

What you’d see is ever greater expressions of non-racism or even anti-racism from white people, while people of color continued to experience disproportionately negative outcomes and whites accumulated ever more power, wealth and privilege at their expense. How you expect those well-meaning, non-racist whites would react when someone reminded them of the machine and asked them to shut it down?

How white is Elmhurst? According to census records, the Chicago metro area is roughly 52% white and 16% black. DuPage County, where Elmhurst sits, is about 66% white and 5% black. Elmhurst is 82% white and barely 1% black.  With a population around 45,000, Elmhurst is home to a few dozen black households and a few hundred Hispanic families, in a region where almost half of the residents are non-white. As the Chicago area has become markedly less white over the decades, Elmhurst’s demographics have been almost entirely untouched. You are hardly more likely to be greeted by a black face in Elmhurst today than you would have been in 1950.

Why is Elmhurst white? History plays a part, but the machine set in place to create this outcome still operates today. Down through our history, documented displays of racial hostility in the community are hard to find. They were never necessary. For generations it was virtually impossible for any black family to finance the purchase of a home in Elmhurst, or in much of DuPage County.

Though laws explicitly segregating neighborhoods were struck down in the 1940’s, banks’ discriminatory lending practices, including neighborhood “redlining” continued to be legal well into the 1970’s, and continued as a practice for well over a decade more. A complex of laws at all levels, from lending restrictions to local zoning rules, set in place to meet ostensibly race-neutral goals, have worked to wring wealth out of minority families while shifting capital into white neighborhoods right up to the present.

Elmhurst remains white today as a legacy of openly racist housing policies from the past and a present-day practice of subtly racist zoning and leasing policies, none of which required anyone locally to take an overtly bigoted stance. Rules barring construction of affordable housing, apartments, or high-density housing while allowing landlords to reject Section 8 recipients performed the job of a burning cross without the unpleasant odor. In the name of “property values” and attracting “the right kind of neighbors,” communities like Elmhurst could exclude minorities without unseemly displays of racism.

Over its history, Elmhurst has been white because a wider collection of racist practices crafted the community into that mold. Elmhurst remains white today and is likely to stay that way for the foreseeable future for one simple reason. White residents benefit from Elmhurst’s segregated character and they will not take steps to change it. The machine is still running and we benefit from it too much to shut it off.

What would it take to turn Elmhurst into an inclusive community? It would start with a change in the way the city is regulated, built and developed. Those changes would be beneficial beyond racial lines, helping to blunt the economic damage of artificially high home prices on families regardless of race.

Local zoning decisions do more than any Klansman could to reinforce residential discrimination. All of these measures would be defended today by Elmhurst residents in the name of “property values” or other race-neutral terms. Their impact is to extract value from families struggling to rise while accumulating value among those who have already achieved the benefits of whiteness. Once the machine is built, you don’t need racists to keep it running.

Why does segregation matter? In our system, a home isn’t just a place to live. My address is my membership. A popular sign posted in yards around town, promoted by the Elmhurst Pride Collective reads, “Elmhurst is for Everyone.” Yet, like “Black Lives Matter,” that statement is entirely aspirational, not reflective of realities on the ground. Elmhurst most certainly isn’t for everyone. Choices we make about who gets to live here and who doesn’t alter the shape of lives beyond our vision.

Bill Gates and Paul Allen met at their exclusive Seattle-area Lakeside School. They were drawn together by the school’s rare investment in access to a mainframe computer, an investment that transformed not just their lives, but ours. How many new Gates’, Allens, or Steve Jobs are we failing to develop because Americans hoard our resources in white neighborhoods? Communities matter beyond their boundaries.

It’s easy to recognize the power of communities to influence individual life outcomes once you strip away the American mythology of individual achievement. Neighborhoods store, nurture and magnify wealth. No one family in Elmhurst possesses the wealth to individually support the school district’s nine-figure annual budget. No single family can, on their own, buy and sustain the rail system that provides convenient, walkable access to downtown Chicago. None can individually fund the town’s spectacular library or deliver the dense network of health, educational and infrastructure support that amplifies the wealth of every Elmhurst family. Community is communal. And community is defined as much by who we exclude as by who gets to live here. Racism is not an attitude. Racism is a system.

A 2019 report from DuPage County’s Community Development Commission on fair housing impediments documents a notable instance in which a local resident said the quiet part out loud. Neighboring community, Oak Brook, recently considered zoning changes which might have opened this white community to minority residents. From page 16 of the report:

“You start bringing in renters and when they leave, they leave an empty apartment,” he said.

“It’s going to destroy Oak Brook as we know it.” The resident said he was afraid that the apartments would become Section 8, part of the Housing Act, which authorizes the payment of rental housing assistance to private landlords. “The border we have on the east side is something we don’t want in this town.”

Even if we succeed in dismantling institutional barriers that keep Elmhurst white, further steps would be needed to make the community more inclusive. Maria Krysan and Kyle Crowder, researchers at the University of Illinois at Chicago and the University of Washington, respectively, have reviewed successful efforts at residential desegregation in the Chicago area. In their book, Cycle of Segregation: Social Processes and Residential Stratification, they explain how “social-structural sorting” keeps racial segregation in place even without deliberate, open campaigns by bigots.

Potential homebuyers or renters are never coming to their search with a blank slate. They bring expectations about which neighborhoods are “right for them” influenced by engrained habits of thought, what Krysan describes as a heuristic, a mental short-cut. In our culture, those shortcuts are heavily influenced by racist falsehoods.

People assume that if they know a neighborhood’s racial composition, they also know things like how much its housing costs, its crime level, how welcoming it is to people of color, and so on. And too often, the application of these shortcuts, which vary to some extent based on a person’s racial background, results in perceptions that lead whites away from black or integrated neighborhoods, and which also lead African American homeseekers away from predominantly white communities.

Even after breaking down the subtly racist economic and zoning barriers that limit access to Elmhurst for non-whites, we’d need rewrite the heuristics that leave people of color nervous about their potential investment in the town.

Publicizing a commitment and openness to people of all races and ethnicities could be done through public statements, public relations campaigns, and/or visual images conveying a diverse community. In addition, mobility counseling and other efforts to disrupt the use of racial composition as the ‘best cue’ of whether a place is welcoming to people of color need to pay explicit attention to this issue.

In a place like Chicago with some of the deepest residential segregation in the country, desegregation will not happen passively. Communities like Elmhurst, if we are serious about addressing the issues outlined in the Black Lives Matter march, will not only have to dismantle the machine that produces racist outcomes through carefully tailored land use and zoning laws. We will have to demonstrate a very visible openness to people of color, breaking down the embedded impressions among black families about what they should expect here.

For a model, Krysan mentions successful campaigns in communities like Oak Park and Cleveland’s Shaker Heights to address this problem. What are the odds that Elmhurst would be willing to even consider such an idea?

Seeing a mass audience of white Elmhurst residents marching to bring racial justice to other places is nice. Converting that energy into a concern for conditions in our own zip code is the acid test that separates Instagram posers from citizens and leaders. It’s early and there is reason for optimism. Turning enthusiasm into progress means finding the ground beneath our feet and investing our energy in the place we live. Building a country in which people from all backgrounds can have the opportunity to flourish starts with understanding why Elmhurst is white, and confronting the habits and practices keeping it that way.

38 Comments

  1. Chris, on a completely irrelevant note to your post, but one I am really interested in. The tyrant is saying 99% of all Covid cases are harmless. Fauci says that is wrong (which a 6 year old could confirm). Every day I am reading of “potential new long term effects”.

    This thing has been around for months. Does ANYONE know what percentage of cases ARE truly harmless, what percentage kills, what percentage have symptoms but recover 100%, and what percentage end up with lingering/ permanent conditions.

    I have stated openly that I don’t give a damn if I get it, and think pretty much everyone will. But I sure as hell care a lot if I survive this but am permanently incapacitated in some manner.

    1. We don’t know. Here’s why.

      You can look up stats that compare “infected” to “recovered.” In theory, that should be your best metric and it yields a mortality rate somewhere around 5%. But there are a couple of problems.

      First, this isn’t over, so the mortality stats will necessarily be incomplete.

      Second, it may never be “over.” There are indications that C19 is a chronic illness, in which case there’s no such thing as “recovered.” People might be dying from complications of C19 years after the initial infection.

      So it could be a long time before we have a reliable sense of this disease’s mortality rate.

      Plus, mortality may not be the statistic that most defines this pandemic. As with polio or malaria, what may be most significant over the long term is not the acute impact of deaths, but the burden of having a large portion of a society living the effects of a chronic illness.

  2. Re: home values. This discussion is important because housing is perceived as a social, economic, and cultural determinant In America – for reasons stated in the post and comments. I won’t elaborate on them. What I do think is important to the discussion is “why” people buy homes. There is a deeper motivation for most people than investment. Homes are the bedrock of the American democratic system. The family unit. Cost and location are important limitations and goals. At its core, owning a “home” reflects values people long for: a sense of belonging, security, status, safety, privacy. It is a foundational, aspirational achievement as inbred as achieving financial security.

    Which brings me to the issues elaborated in the post – barriers, racism, and social acceptance. Housing inequity is a symptom of moral, cultural failure. Equality depends upon educational access and employment opportunity. It requires a “just” society, which has different meanings to different people. We are witnessing these differences today in full, ugly display thanks to modern technology and raw, visible politics. Racism is deeply ingrained in the Americans psyche and housing access is a cruel instrument of its perpetration.

    Interesting to me, as one who was employed in the new home industry for several years, is the change that is happening in our young people. Many are locked out of early home ownership because of student debt; but more are beginning to reject home ownership as a measure of self-worth or necessary for personal happiness. “Bigger” is not “better”. Acquiring more debt is not worth the cost of home ownership. Hence, smaller homes are gaining in acceptance for practical and personally desirable reasons. Whether by necessity or circumstance, many are forgoing home ownership and finding it “freeing”. This remains mostly a White people’s phenomenon because for Black people, housing has always been challenging, necessity being the driving determinant.

    I live in a neighborhood with Black families and other nationalities. They are undeniably successful and in the minority. I didn’t buy my home because of its racial mix but I am certain the Black families’ decision, in particular, was not as simple. I welcome them and applaud their achievement, but, mostly, I hope they are happy here.

    Slowly, change is coming in spite of the ugliness that permeates our discourse and confronts us daily in a myriad of ways. There is so much more we need to do. Home ownership can help break down barriers as opposed to create them, but the real work, real progress is within each of us, and it is not going to be easy for us or quick. Privilege is as difficult to give up as it is to acknowledge.

  3. Watching CNN. I really don’t understand all this gloating about the SCOTUS ruling. Only one is calling it a “practical victory”, which it is.

    The tyrant’s records are protected for who knows how many months/ years, and will very likely never publicly available. There is no guarantee that Congress will actually ever go after him.

    1. No one save for the hardest of hardcore political types cares about whether Mango Mussoulini’s records are made public or not; and most importantly, November was never going on hinge on them in the end, anyway.

      Trump went to the mat to protect his records and got a Hindenburgh-esque legal ass-kicking. Even Kavanaugh and Gorsuch voted against him! The rest is up to us now, and to make the Dear Leader sweat bullets every day at the knowledge of what’s coming for him as soon as Biden is sworn in.

      Calm thyself, Dins. For all its many failings, the system stood fast where it needed to today.

      1. Totally agree Ryan. Nobody who was paying attention expected to see the tax returns before November, especially when SCOTUS decided to take this up. This line needed to be drawn firmly, and it was. While it should have been 9-0, I am pleasantly surprised by 7-2, and good for Gorsuch and Kavanaugh for getting it right.

        While the voters ought to be able to see those financial records, they really aren’t necessary to form an opinion on Trump. If you haven’t figured out by now that he’s a lying, corrupt, malevolent fraud, this new info wouldn’t move you. It is important for eventually holding Trump accountable for some of his malfeasance (it’s the N.Y. case that should scare him the most) and a warning to future Presidents- you don’t have absolute immunity.

    2. Trump won. We’re not going to see those records, neither will the Manhattan Grand Jury. And after he loses, the new Administration will try to make this all go away.

      Here’s an assessment from someone who actually read the Court’s decision:

      “”We are pleased that in the decisions issued today, the Supreme Court has temporarily blocked both Congress and New York prosecutors from obtaining the President’s financial records. We will now proceed to raise additional Constitutional and legal issues in the lower courts,” Sekulow said in a statement.”
      https://www.npr.org/…/supreme-court-says-trump-not…

      1. We don’t agree much these days, but on this, we are lockstep.

        SCOTUS is a tool of this fascist regime. Those that still believe in the fantasy of the rule of law are in for a big shock starting Nov 4th when the lawsuits start, or likely even before.

      2. Even from the most cynical political position, that makes precisely no sense. You’re telling me Biden’s going to spit in his political base’s face and openly deny them their most fervent wish, at *precisely* the time when that very wish is the reason why he’ll have won the presidency in the first place?

        I dare say you’re letting Dins’ compulsive pessimism get to you, Chris. I’ll believe that level of absolute political insanity when I see it.

      3. Ryan, I really would like to have some of the drugs you must be on, and a set of those rose-colored glasses as well.

        Let’s pretend for a moment that there is a fair election, and the tyrant loses. You seriously believe there will be no spasm of violence and killings? Biden would then become the Great Pacifier in Chief, and say “We must heal as a nation. We can’t let these wounds stay open.” He may not pardon the tyrant, but he sure as hell will discourage going after him.

        Plus, as Chris as pointed out, there are a whole bunch of Dem’s who would be less then thrilled to be the target of similar investigations in early 2025.

      4. No drugs or rose-colored glasses, Dins, just the unbreakable belief that no matter how far humans fall, they always have it in themselves to rise to their highest ideals and potential.

        That aside, I’ve been of Chris’ belief that our immediate post-Trump years will be among the deadliest we’ve met as a nation since the start; never doubted that for a moment. I simply don’t believe that Biden is so profoundly stupid as to not recognize that letting Trump go would be anything but the political equivalent of throwing a lighted match into an ocean of kerosene.

        You say he wants to be the “Great Pacifier in Chief”? I’m not inclined to disagree, but doing anything but prosecuting Trump to the fullest extent of the law will shake more than half of this country to its core and drain Biden’s political capital faster than his former supporters will be ready to tar and feather him.

        Could be wrong (always a chance!), but it seems pretty straightforward and inarguable to me.

      5. Were you asking me or Chris, Mary? Apologies if I’m speaking out of turn, but I’ll throw in my two cents anyways.

        Both in terms of justice and the broader political considerations, we won pretty resoundingly today. Obvs as it was, SCOTUS affirmed (with even Alito and Thomas agreeing in their dissent) that the president does not have ‘absolute immunity’. A man who’s thrashed and wailed about in trying to have everything his way just got legally smacked upside the head and told (even by his own appointees!) that he has to play by the rules, such as they are, just like everyone else. That’s gotta be killing him inside.

        Politically, we got about as good as we could’ve. Turning SCOTUS into just another political arm to get Trump’s tax returns might’ve been hella satisfying in the short-term, but that’s a precedent that would’ve come back to bite us in the ass eventually. And it *really* wouldn’t have been worth it, IMHO.

        Time-wise, I’d argue there was actually nothing to win here. What did the Dear Leader actually get out of this? Saving his irreparably broken ego the humiliation of the entire nation knowing he was never as rich as he said he was? We knew that already. That he’s financed by Putin and the Russian government? They already admitted that!

        And most important of all, no one’s mind or vote was changing because of what’s in those returns, and ultimately that’s what counts this November.

      6. Has Trump certainly and undeniably escaped ever being criminally prosecuted? No? Then the fight’s not over yet.

        Love or hate today’s ruling, it’s just one more chapter in a longer story. Patience.

      7. By the time we get to the second week of the Biden Administration you’ll be hearing this: “Do you want to get universal healthcare or prosecute Donald Trump?” And they’ll repeat it over and over again, as if public integrity were a trade-off with political effectiveness.

        The federal cases against Trump will be quietly resolved. Vance will reach some symbolic settlement in the NYC cases, just like the meaningless fines in the Trump University case.

        And everyone will move on.

      8. I posted some weeks ago the 8 scenarios that I could see unfolding around and after Nov 3. I don’t think I had factored in the pandemic, but I really don’t think that changes that much.

        All of you, game out all potential scenarios you care to. Then honestly ask yourselves. If the tyrant died of, I dunno, let’s go with “heartbreak” Nov 4th, how many of those scenarios’ outcomes improve?

        That is the ONLY justice that anyone is going to get with this tyrant, and it leaves the country, and planet, in a far better place.

  4. Hi Chris
    I agree with your article BUT there is a problem

    After all of the issues are fixed – and they are not fixed YET
    THEN there will be a delay of decades before the results of those issues (the white Elmhurst) go away
    Even when the process has started it will take years before the change is visible

    A BIG part of the problem is that people do NOT see the changes that have already happened

    On that subject I would like to recommend this book

    https://www.amazon.com/dp/B0769XK7D6/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=1594086209&sr=1-1

    Factfulness: Ten Reasons We’re Wrong About The World –
    And Why Things Are Better Than You Think

    We ARE making progress – even if it is much much slower than we would like

  5. Great read! Will be shared as most of your posts. I found a few typos for you. I copied the original text so you can search the spots easily. And feel free to delete this comment after fixing them.

    If Elmhurst is willing to turn in out in such numbers
    Racism not an attitude.

    1. That article doesn’t make any sense, first it says there are too many positions at the top creating too much competition, then it says there are too few positions at the top for that competition to fill, then it says it should be fixed by reducing the number of positions by directly redistribution wealth. So that people’s expectations will fall? What?

      I am not against wealth redistribution but the way this is framed us that redistributive taxes will lower ambitious young people’s expectations, and like, I think it would just piss them off even more.

    2. I’ve seen this theory a couple times recently. It was fleshed out on Slate Star Codex (which is down right now, so no link). Turchin’s book is called Secular Cycles, for anyone curious. Noah Smith’s article omits that it’s a rather mechanical theory. It applies most strongly to feudal times, when social mobility was completely non-existent and the number of titles was rigidly fixed, but I agree with everyone else sharing it that it applies to our times as well. Anyway, the idea is that children of elites mostly all expect to be able to live at a lifestyle near that of their parents, but the elites reproduce much faster than the number of good stations in life. So eventually the elites all go to war with each other (figuratively if not literally) and when the dust clears they have thinned their numbers and there are enough worthy jobs/titles to go around to the victors (thus restarting the cycle).

      Another quip about the article: If you think that even with $10M in the bank you’re a failure, then nothing can help you and I for one will not be leveraging my vote to make you “feel rich again”. As a theoretical maximum, one should be more than able to support themselves on $100K/yr.
      That said, inheritance is disgusting and I will always support moving towards a world where who your parents were doesn’t matter (death tax, wealth tax, reforming how we fund our schools, …). As for PhDs, we need to rethink the role of degrees. Less encouragement for kids to get into lifelong debt following their dreams, and less requiring degrees for jobs that don’t need one.

  6. Antimule, two things

    1.) Chris wrote about this under “Socialism for White People” — I can’t remember if it’s here or on the old GOPLifer site, though.

    2.) There’s an additional consideration that’s as much about *keeping it in the family* as anything else. The opening shot in this was California’s Proposition 13, passed in 1978 as a way to protect older homeowners from having their houses appreciate to where they couldn’t afford the property taxes. Prop 13 has bastard children that (intentionally?) almost establish a landed gentry where children/grandchildren can inherit their property and keep the low valuation for purposes of tax-payment. Not sure if other states have this (MA has a variant but it’s not multi-generational, and local voters can override for an increase), but it’s all about, “Fuck you, got mine!” at the end of the day.

    1. Kebe-
      The real beneficiaries of Prop 13 were corporations, who generally hold their land in LLCs and other holding companies. Then, when the land is sold, what actually happens is that another company buys the holding company. Since the land itself was never sold, just the holding company, the land value never gets reset to the present day (the way that houses sold in the market get their value reset).

      If the real goal was to keep retired folks from being priced out of their house, they could have capped the annual payment, but then roll the rest of the property tax assessment, and defer it until the house is actually sold. That way, eventually the city still gets paid and everyone pays the same rate regardless of when they bought (although this is still a tax break because the deferred amount is deferred tax-free, sort of like an IRA). But for companies (and homeowners), such a deferred cost would still have to be accounted for as a liability, reducing what they get paid for the property, so this was never done.

  7. As a non-american, I am getting the sense that those restrictive zoning rules and inflated property prices are also beginning to pinch not just minorities but also white millenials, who are also having difficulties buying homes in this environment. If so that would solve the riddle why so many BLM protesters are white: because young whites also stopped getting the benefits from the system.

      1. For this reason, I am not sure whether it makes sense to call this system “white supremacy” any more. Sure, that’s what it *originally* was but these days that system is on autopilot and badly malfunctioning. Now it is mostly about preserving boomers at any price, even if it devours their children.

        I guess “white gerontocracy” is closer to what is actually happening.

      2. This system still depends on white racist fears as its last bastion. You can make all kinds of progress toward tearing down these restrictions, then come all the dogwhistle defenses. Density will bring in “the wrong kind of people.” Affordable housing will cause a crimewave. You hear the word safety mentioned over and over and over. Race is still the lynchpin for this system.

    1. One of the big reasons for millenials slowness in acquiring homes is the increasing economic inequality in the U.S. Young whites are frequently handicapped by very high student loans, for which they are struggling to make payments, unless they have a STEM education or a professional degree. Millennials with liberal arts degrees are frequently trapped into low paying jobs. Furthermore the median income has been stagnant or decreasing slightly for close to four decades. The entire economic system is structured so the wealthy can acquire capital, while the earned income classes barely have enough to live. The U.S. taxation system has become increasingly regressive.

      Meanwhile, public services continue to shrink. Chris mentions “the town’s spectacular library or … the dense network of health, educational and infrastructure support that amplifies the wealth”. That is essentially true of virtually all local governments everywhere. Only the wealthy localities can afford that infrastructure. Not only does that lack of infrastructure make it difficult for minorities to bootstrap themselves up, but it is also affecting the opportunities that young people have, unless they come from elite families.

      A good example is myself. My nuclear family was a lower working class family. There was not an opportunity for most to pursue higher education or to break out of the trap. I was able to only because I am a veteran and took advantage of the Vietnam era GI Bill to get a University Education. When I enlisted there was not a GI Bill; the Vietnam era Bill was only enacted in 1965 after Vietnam heated up. But generally the national economic structure was such that working class children could by hard work and diligence accumulate some wealth. But all that has changed now.

      1. tmerritt-
        All of that is true, but it still doesn’t negate the fact that housing is still too expensive, because every generation expects to sell their property to the next one at a much higher price — higher than inflation, or else it would be better to keep your money in a bank instead of a house. That’s the definition of a ponzi scheme, and like all ponzi schemes, they all fail when there are no more suckers at the bottom to support the few winners at the top.

        For someone who doesn’t have a house they can rollover into a bigger house, i.e. someone at the bottom of the ponzi scheme, even without the student debt obligations and the lousy economy, they cannot afford current house prices in desirable cities. In Orange County, CA, the median household income is $60k. That’s not bad, significantly higher than the national average of $40k. IOW, orange county is a rich county. But median house prices are $730k. That’s a 12x difference.

        30 years ago, the rule of thumb was that the max you should pay for a house was 3x your yearly salary. Any more and you would spend too much of your monthly paycheck on housing, a phenomenon known as house rich and cash poor. Now, in places like orange county, you’re expected to pay 12x your yearly salary. That is unaffordable even before you factor in larger student loans, etc. that young buyers are burdened with. I’ve lived in Orange County. Everyone who didn’t buy a house 20 years ago is house rich and cash poor, and make up the difference with staggering amounts of debt.

        This is how insanely expensive our housing market has gotten. Do you remember in the 80s we would marvel at how wildly expensive Tokyo was? How even tiny apartments would go for unheard-of rates? Well, those prices never crashed, just stopped growing for the past 20 years. And now, living in Tokyo costs as much as living in Chicago, which is the cheapest big city –by far– of American big cities, somewhere around 1/3 to 1/4 the expense of places like SF and NY. Why the difference? After all, they are dealing with the same population growth (in the city itself, not the country of course), and Tokyo is more land-locked than SF. The difference: Tokyo builds a ton of housing:

        https://www.forbes.com/sites/scottbeyer/2016/08/12/tokyos-affordable-housing-strategy-build-build-build/#3f6dd25f48d5

        tl;dr: thanks to a national law that stripped local communities from imposing draconian zoning laws, Tokyo builds more housing every year than the entire state of California, and the entire country of England.

        But to most Americans, whatever concern they might express about how houses are too expensive for young people, they don’t want to do anything about it, because lower prices mean less retirement / inheritance money. I understand the feeling. Would you want to buy a house in Tokyo? Knowing that in 20 years, you’ll likely be paid less for it than you bought it for? Like I said, for most Americans, their house is their biggest investment. And I don’t want to see our elderly not being able to afford a comfortable retirement. But it’s leading to massive distortions of land use that are now untenable. Student loans and all that stuff merely adds to the primary problem.

    2. Antimule-
      That’s a really perceptive point, and it gets to the real problem with real estate in America.

      Housing in America is the biggest investment that most people make in their lives (very few people are rich enough to have more assets outside their house than inside it). But this is a ponzi scheme. For every seller who gets a great price and cashes out his retirement from his house, there’s a buyer who got a raw deal. Macro-economically speaking, a great investment is something that grows in value faster than other assets people can buy, including such investments as education (if you could live better by taking your down payment and paying for college instead, then most people would do that).

      But housing is actually not an investment, it’s a cost: houses deteriorate, must be maintained, and eventually, are obsoleted and torn down. It takes massive, massive government intervention in order to turn housing from a cost into an investment, especially one that allows people to accumulate a large inheritance out of it (an inheritance that’s ostensibly paid by the new buyer). This started with FDR, who created the federal mortgage backstops like the FHA, Fannie Mae and Freddie Mac to take on the risk of long-term loans, which converted real estate from a risky asset only people with substantial wealth could own without the risks involved blowing up in their faces, to something every average American could ostensibly buy. That single policy move caused homeownership to explode, and people to start viewing real estate as a safe, stable asset to pour their net worth into. And once 90% of your voters have the vast majority of their net worth locked into their house, no politician will ever let house prices go down. Even if you must destroy the rest of the economy with policies like zero and even negative interest rates.

      (As an aside, housing is as socialized in America as it was in the USSR, except, as we’re wont to do in this great country, we hide the socialization part by funneling it through banks, which take their (massive) cut. Think of it this way, we pay 4% to a bank for a loan, who then sells it to Fannie Mae, thereby taking no actual risk on the loan. Fannie Mae in turn uses our taxpayer money to provide a federal guarantee on the loans, so that the Federal Reserve can buy them at 2%. Given the lower rate on the bonds, the banks are essentially getting our (i.e. taxpayer money) at 2% to lend back to us at 4%, with us (i.e. the federal govt) guaranteeing the loan against any loss anyway. IOW, the Federal government is the largest owner of houses in the US, and most of us, when we write our check to our bank, are really writing our monthly checks to the government, just like the Soviets used to do. But if I were to ask why the Feds don’t just lend me my mortgage at 2% to begin with and do away with the middleman, I get called a communist :-).

      If houses are a great asset, then someone must buy them at an inflated value. There’s no way out of that zero sum game. The government has tried to appease both sides by lowering interest rates so new buyers can afford to pay off the older generation, but even at zero rates, houses are now unaffordable to many young people. No politician wants to stick around for when the great reset occurs, because when you’re talking about people’s life savings, the fight tends to become violent.

      1. Antimule-
        Because in America, it does. From the Great Depression (1940s) to the Great Recession (2008) there was not a single year in which the national median house price declined. That’s several generations of people conditioned to believe that homes not only can go up in price your entire life, but *should*, as a matter of right.

        Very few people see the massive interventions in the market required to maintain that fallacy. From the government-guaranteed mortgage sponsors like Fannie Mae, to the tax deduction for interest on a mortgage (why no tax deduction for renters?), to the break on capital gains when you sell your house and finally cash in, to the zoning that keeps people from increasing supply. There are plenty more. For example, I would argue aspects like how schools are primarily funded by property taxes means people choose where to live based on how good the schools are, which reduces the ability for people to vote with their feet and move to cheaper, less zoning-restricted towns.

        Zoning is particularly insidious because, since decisions are made locally, no one cares about the big picture. To add to Chris’s point about racial disparities brought about by zoning. In most cities, ironically, the most permissive zoning is in poor, predominantly minority, areas. Because those people have less power in their city govt, compared to rich white areas. Which means the most desirable parts of a city often have the least density and most restrictive zoning. While the worst parts often have the highest density. Now, density by itself is not a problem (indeed, IMHO, it’s a solution), *if* it’s followed by investment in infrastructure e.g. transportation, schools, jobs, etc. But again, thanks to the disparity in power, all that good stuff goes to the rich parts of a city. IOW, the places with the least density, most restrictive zoning, fewest households, get the lionshare of city resources spent on them. While the poorer areas must deal with being ghettoized in high rises without the infrastructure needed to make the density work.

        When Americans say “we need to build more housing” what they generally mean is we need to build it *elsewhere*, i.e. NIMBY. So that their own personal house remains in high demand. And when the same people say we need to make housing more affordable, they generally mean make the monthly payment more affordable, by lowering interest rates, increasing govt subsidies, etc. Anything but actually reduce the sticker price that would reduce their “market” gains.

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