Episode 53 – Colored Property: A History of Redlining with David Freund

Macro N Cheese – Episode 53 
Colored Property: A History of Redlining with David Freund 
February 1, 2020  

 

David Freund [intro/music] (00:03): 

White people who benefited disproportionately from these programs, they benefited, not just because the so-called racist market act refused to accept non-whites in neighborhoods, rather that the market itself was designed by the policy process. I would tell people that I’m writing about how white people segregated their neighborhoods, and again, why they’ve invested in this myth about it.  

And they would go, turn, look back and say, Oh, you write about African American history, and I’m like, I’m sorry, were you listening to what I just said. 

Geoff Ginter[intro/music] (01:27): 

Now let’s see if we can avoid the apocalypse all together. Here’s another episode of Macro N Cheese with your host, Steve Grumbine. 

Steve Grumbine (01:29): 

All right. And this is Steve with Macro N Cheese. Today, I have a gentlemen who I met through The Modern Money Network and hearing him on Money on the Left. He did a phenomenal interview and I was so impressed. He also put me in touch with Keeanga-Yamahtta Taylor, which to me was a priceless interview.  

I was still glad this happened, but David Freund is an associate professor in the Department of History at the University of Maryland, College Park. He’s the author of “Colored Property, State Policy and White Racial Politics and Suburban America” and folks, this is pretty much what we’re going to be talking about today, which received the 2008 Ellis W.  

Hawley Prize from the Organization of American Historians, the 2007 Kenneth Jackson Book Award from The Urban History Association and the 2009 Urban Affairs Association Best Book Award. Other publications he’s written include “The Modern American Metropolis, a Documentary Reader” and “State Building for a Free Market: the Great Depression and the Rise of Monetary Orthodoxy.”  

David has contributed to a number of public history books, history, public policy and documentary projects including California’s Newsreel Race: The Power of an Illusion and the CERD Working Group on Housing, Segregation and Discrimination in the U S. He has received a lot of grants. He’s received a lot of fellowships.  

And quite frankly, I’m really thrilled because David brings a wealth of information as he teaches courses or metropolitan history, state building, racial politics and the political economy of capitalism and inequality in the modern US. And with that, David, thank you for joining me, sir. 

David Freund (03:36): 

Hello to you. Thank you so much for having me on. I’m really looking forward to this. 

Steve Grumbine (03:41): 

So this book that you wrote, “Colored Property,” we just had Keeanga on. Thank you very much for helping set that up, by the way. 

David Freund (03:50): 

Oh no, no. That’s such a gorgeous book that she wrote. 

Steve Grumbine (03:53): 

It is incredible. I’ve really felt a tremendous amount of mixed emotions where number one, just peeling back the layers of the onion and reading these things that I’d like to believe I’m enlightened as I’m reading them. I felt terribly, terribly inept in the subject. And then I realized you wrote the prequel to that.  

And she made the point in the interview that her subject matter was post-red lining and what that meant in terms of predatory inclusion and the way that they created these public-private partnerships and so forth. You took this story from the beginning back to pre-World War I in that era. Tell us a little bit about the book and let’s get into the idea of how you even came to writing. 

David Freund (04:40): 

Okay, great. Well, “Colored Property” is a history of the federal government’s role in creating all white suburbs and in segregating metropolitan areas by race and wealth. It focuses on the first decades of the 20th century, all the way up through the passing of the Fair Housing Act which is where Keeanga’s book ends.  

Very briefly, it’s about the origins of the redlining story, which is increasingly familiar to a lot of people, which is a recent development. I think a very exciting one. These are the famous color-coded HOLC maps that were introduced in the 1930s that federal appraisers and private industry groups, the building and real estate industry, they used these to allocate the mortgage insurance, which was absolutely integral to creating a nation of homeowners after World War II.  

And these maps very explicitly identified certain neighborhoods as risks, as financial actuarial financial risks, right? So those neighborhoods wouldn’t get the loans. They were red colored in these maps, and this is where the vast majority of people of color actually lived. So these are the famous red lining maps.  

This is the story that, again, it is known by more and more people outside of activist circles in the Academy. The book also looks at some important related developments, including changes in municipal politics during this era, the rise of municipal zoning, the actual power to zone and how it was used, and also the rise of the planning profession and the real estate industry.  

But taken all together, the book argues that these developments together created something that’s very familiar to us. The late 20th century landscape, really of the United States, the nation where the majority of people own their homes, where most growth for a long, long time still to this day is focused in suburban areas rather than urban areas and where we have these remarkable disparities in wealth and in wellbeing and the geography of this kind of disparity.  

So an finally I argue that they help to hide that all these developments that I look at actively helped to hide this history from the people who were living it. So there’s this kind of dual story going on there. One about the, kind of, again, the nuts and bolts of how this happened, but there’s also a story about the politics and the political narratives that accompanies it and why they have distorted our understanding of the federal government’s role in racially segregating American metropolitan areas and segregating wealth in home ownership by race.  

That’s a rough kind of a snapshot of what the book does. 

Steve Grumbine (07:28): 

You know, you gotta wonder looking back at the history, leading up to the beginning of your book, even in our history, we never really had so many shots to reset racial inequality from the minute that the civil war ended through reconstruction into the early 19 hundreds. And we just never took it; every chance we had, we butchered it.  

We screwed it up. And this story here that you’re laying out, this history, it seems to be just an add on to a nonstop, systemic approach to oppressing people of color in this country. 

David Freund (08:03): 

That’s really interesting. Yes. And it kind of speaks to what I would say are the kind of the two goals that I had in mind when I wrote this, you know, I’m a historian. I read a lot of stuff and continue to read a lot of stuff on this subject. And I sort of approached this project with a couple of goals in mind.  

And I should say these are goals that have animated so much great scholarship in the last two decades or more — the scholarship on racial inequality, on white racism, on the wealth gap. Cause remember that, you know, when people like me and my peers were writing this stuff in the nineties and the thoughts that much of this story about systemic discrimination in the public and private sectors was well known, at least for folks who were looking, right?  

Activists and scholars alike had been telling this story for generations and specifically in the housing arena, many had been publicizing the federal government’s role in segregating the housing market since that role began, which was in the 1930s. So the basic narrative about this federal role most famously the work of Federal Housing Administration or FHA, the basic narrative about that was out there for anyone who is serious about these topics.  

What I and a lot of my colleagues did, and this is where we focused a lot of our energy, and it speaks to your point about, you know, this is an old story, right? So what can new scholarship and new writing on this tell us? Where we focus a lot of our energy was on two things that I think a lot of us thought hadn’t received enough attention.  

The first one was we recognized that people really needed to learn more about how systemic discrimination worked — at works. I mean literally how these systems operated. So what are the basic mechanics of mundane things like federal credit programs? And this includes the very famous GI Bill that a lot of people know, this is basically a federal selective credit program.  

What the heck is that? Well, that’s what the GI Bill was, is one of many. How did things like local land use controls operate, or what are the mechanics behind court rulings about equity in housing, employment and education? Right? So a lot of us saw is that since the New Deal, especially, countless public-private collaborations have dramatically shaped the American economy and access to opportunities.  

So the housing story I’m telling is one of many of those stories. How do they work? Now, you also have to realize that these are not sexy topics, right? To be sure you can imagine my students delight when I start class by announcing, Hey, today, we’re going to learn about the mortgage market. They glaze over and the eyes roll and stuff like that.  

Nonetheless, it’s really critical that people reckon with the nuts and bolts of what are ostensibly boring topics like public policy and credit markets in order to understand why they have been so influential and critically why their influence is so often overlooked. Indeed, a lot of us argue that their influence is invisible to countless people in this country.  

I said there were two things that kind of animated my project. And that’s the second focus of so much exciting scholarship, something that’s united a lot of us. We’ve been exploring how and why people have become invested in make believe accounts of American History. In this case specifically, in stories about success and failure that are demonstrably false.  

I mean, if you look at the historical record, they’re not true, but people are really like, they get a lot of traction and people really rooted in these stories. So what a lot of us have been asking is why are the dominant narratives about public policy, about cities, suburbs, about racial segregation, opportunity, poverty.  

Why are these narratives so fundamentally distorted, right? So removed from reality and the historical record. And I’d say more broadly, why have so many Americans long believed that the federal government plays a limited, if any, role in creating prosperity for some at the expense of others, right?  

It’s safe to say that in general Americans associate what was often called a big government, they associated only with a narrow range of interventions, social welfare program, taxes and regulation, perhaps with building basic infrastructure. But they don’t see that the federal government has long sustained and shaped entire markets for housing, the focus of my work, for durable goods and new technologies, for agricultural production.  

And of course for weapons, right? So indeed much of our political and popular discourse, the relationship between in that discourse, the relationship between government on the one hand and markets is pretty clear cut, right? That story says federal overreach distorts the market. Yet historians of these subjects have long shown that in fact, the federal government has been instrumental in making markets, in creating wealth and in deciding how that wealth is distributed.  

So my focus in “Colored Property” is on one part of this story. It’s on the market for single family housing and it’s racial politics. 

Steve Grumbine (13:31): 

I want to ask you a question, David, and specific to what you just stated. Sure. It’s quite clear that people don’t understand the relationship of the federal government, not only to laws in general, but the powers of the federal government and how, in fact, it was even able to influence that. And I think, you know, without going into this right now, but I want to tee it up that this is a case for state money.  

This is a case for understanding how our current monetary system works in general. And I think once people understand that, the things you’re saying, white frankly, become like blinding flashes of the obvious — of course these markets exist because of the government. Anyway, I’m just wanted to interject that. 

David Freund (14:17): 

I appreciate that because, and maybe you heard me talk about this on the Money on the Left Podcast. So we can talk about this later. After we talk a bit more about this book, it was, you know, writing this book drew me into my new work, which is not about finance and state money and things like that.  

And it was in writing “Colored Property” that I basically told a story about the federal government creating financial resources. And I didn’t understand it the same way I do now at the time, because I, wasn’t a really careful student of heterodox economics and all the stuff that I do now. But anyway, so we can talk about that another time, but it’s basically, I agree with your intervention and I didn’t articulate it at the time because I wasn’t quite there yet. 

Steve Grumbine (14:54): 

Very good. 

David Freund (14:55): 

Yeah. So I could say something about how I spoke very broadly about what I think a lot of us have been doing on these subjects, just to give listeners a sense of what the story is here in “Colored Property,” right? It’s on the market for single family housing and it’s racial politics. So I take a pretty deep dive in this book, into the mechanics of credit markets in order to demonstrate, and this is really gets to your previous point, to demonstrate just how generative federal housing programs were in the post war economy.  

So it’s long been documented that the FHA insured mortgage loans, that those loans spurred this housing revolution and that the FHA by and large refused to insure loans for people of color. Were people not moved to FHA, they basically insured banks who were willing to lend long term mortgages. And by doing that, it literally created a nation where most people own homes, where before the great depression, most people rented.  

Created the nation where most people lived in suburbs, single family homes, where before the great depression, most people live in urban areas, right? So these programs were incredibly generative in creating this new economy. And again, they were racially exclusionary. Now, again, that’s not an untold or forgotten story, right?  

It’s rather, again, most people just weren’t listening. That said, most of the people who were writing about it, and a lot of the people who still discuss the FHA in public settings, they insist that that program was by and large, simply responding to the desires of consumers and industry. And they’re telling builders and realtors and bankers responded to this overwhelming demand and made homeownership and suburban residents the new norm in the 1940s, fifties, and sixties, while meanwhile, the federal government stepped in again first during the depression and then in the postwar period to give that market kind of a nudge to where we were going already and because of the great depression and they rebuilt the infrastructure and let that market reach its potential.  

Let me just say to be clear, I’m not saying that the critics didn’t point to federal culpability, but most people who wrote about this at the time they acknowledged the public policy helped structure markets, you know, on these kinds of racially discriminatory terms, but here’s the key. They insisted that public policy and this gets again to your point was following and not leading, right?  

At best, they conceded that the government accelerates process that was underway. And I completely disagree with that. So what I show in “Colored Property” is how these federal interventions and I mean, legislation, new state capacity, considerable spending, federal spending pretty mundane technical stuff, right?  

How these interventions literally created a market for suburban single family homes. So the FHA rewrote the rules and standards for home lending. It mandated that builders follow these rules, and then they actively subsidized the mortgage lending process. And so this was a market that would not have taken shape without this heavy lifting from the federal government.  

And integral to that, I show that the racial and the geographic and the wealth outcomes were also not natural market driven processes. Suburbs weren’t predominantly white and relatively affluent simply because it was a response to consumer needs and demand. And the white people who benefited disproportionately from these programs, they’ve benefited, not just because so-called racist market actors refused to accept non-whites in these neighborhoods, rather, and this is kind of the crux of the book, argue that the market itself was designed by the policy process as a market that privileged white homeowners specifically even by male breadwinners.  

And that market was heavily subsidized for over 30 years by the federal state. 

Steve Grumbine (18:53): 

In your book, I believe you address some of the things that we’re finding today in terms of the language used for these laws, the framing of them. We spoke with Lua Yuille the other day, and she talked about how these laws are on the books that kind of pick winners and losers, and they make us feel a certain way about ourselves.  

And I believe you go into some detail about the whitewashing, if you will, the language going back to the beginning and how these things build on each other to institutionalize these conditions. 

David Freund (19:30): 

Right. That’s the second component here. So there’s a whole story here and about the mechanics, which I think are important to understand. And one of the things I learned in becoming a careful student of those mechanics is that those mechanics help us understand why those narratives were popularized.  

So let me explain it this way. I ask throughout the book, why didn’t all the participants in this housing revolution, right? Especially the white people who are beneficiaries, why did they grow so invested in a falsehood, in a story that it was the free enterprise system that was producing, you know, the postwar metropolis, untold wealth, suburban prosperity, home ownership.  

It was literally remaking the nation’s metropolitan geography. Now people who were students of this era, kind of cold war era, they’ll know that this was sort of the golden age of celebrating free market capitalism. So on one hand, that’s not really a surprise, right? That was sort of the cultural and political pool people were swimming in at the time.  

So what I found in doing this was that looking at again, the nuts and bolts of how these programs worked, help explain how the programs themselves kind of added to the content and energized this mythology, that it was just free markets, not the federal government. This is a pretty multifaceted story in the book, but the long and short of it was this, and I could capture it with maybe some concrete examples, that throughout the thirties, forties, fifties, and into the early sixties, the Federal Housing Administration and all the agencies that were involved in this, they literally marketed their programs.  

I mean, literally like they hired people to go door to door, knock on people’s doors and encourage them to take out loans. I’m not exaggerating. And remember, people were really freaked out. This is the start in the depths of the depression. People were really afraid of going into debt. And this long term mortgage that was invented by the FHA was seen as incredibly risky.  

So bankers didn’t want to lend on these terms and borrowers didn’t want to borrow. And FHA saw that, so they literally like went out and publicized. They did like film reels and brochures. They distributed all these pamphlets to lenders and bankers and to real estate developers, advertising FHA programs, convincing people that they should go into debt.  

And they did it consistently for the better part of a quarter of century, by claiming that this federal presence wasn’t disrupting anything natural. It wasn’t distorting the free markets for property and neighborhoods. So, I mean, imagine there’s a literal kind of like groundwork to convincing the real estate industry and the financial industry and millions of consumers that they should become debtors.  

There was a lot of resistance to that. So FHA officials, they went on speaking tours, they were talking to, they went to the, like the professional conferences of real estate boards and builders and bankers. And like I said before, they literally did these campaigns where they sent out volunteers from the local real estate industry to knock on untold number thousands, maybe a million doors and say, Hey, have you heard about these programs?  

You should really think about going into debt. So this wasn’t like there was this untapped consumer demand to become homeowners. I mean, become homeowners on those terms. I should say that what there was was a lot of people who were freaked out by the great depression, freaked out by the threat of another great depression after World War II.  

And they needed to be convinced that this new market for mortgage debt was a good one. So the mechanical side made sure it was safe. That was the other part of the book. But on this side and the kind of the PR side, they went out there and literally told them: well, yes you’re good, you’re good. We got your back.  

And this is not at all disruptive of natural markets processes. So they told industry and consumers that this new mortgage market represented nothing more than like an opportunity for hardworking Americans to buy a piece of the American dream. And they portrayed the federal role as supportive. They use language like, you know, the FHA is just getting the markets back on track.  

It’s just quote, unquote, “unleashing” existing market energies, the emotional efforts. So use it. So I look at this and all these different arenas and the way they were literally telling the American public that they weren’t doing what they were doing. Right. They grabbed this cold war era discourse that we’re capitalists.  

We don’t have government socialist housing. What we’re doing is not that. What we’re doing is just helping the market pick winners and losers. So in the final analysis, they helped convince, I argue a couple of generations of people who benefited basically from federal subsidies, that they simply earned their good fortune.  

So public policy was actually instrumental in erasing the public role in creating that influence in segregating by race, et cetera. That make sense? 

Steve Grumbine (24:19): 

Absolutely. I mean, you see it now. I look at the seventies and I think about Milton Friedman and this stuff is happening pre-Friedman. 

David Freund (24:26): 

Sure. 

Steve Grumbine (24:26): 

But you know, his concept of the only thing wrong with capitalism is we need some more capitalism. 

David Freund (24:32): 

Right. 

Steve Grumbine (24:32): 

I mean, you go back then. It’s like my goodness, Hey, wouldn’t it be great. Let’s all fall in love and get deep into debt. 

David Freund (24:38): 

Right. Right. 

Steve Grumbine (24:38): 

I mean, it started then, I mean, not to the degree, you see it now where we’re living and dying on Wall Street credit, et cetera. But my goodness, that seems like the beginning of it. 

David Freund (24:50): 

It is in a lot of ways. And a lot of my colleagues have written just amazing stuff about this. You know, the rise of consumer debt is really well documented from especially the early 20th century on, and then a bunch of us have written about the expansion and acceleration of that during and after the New Deal through, again, these what are called selective credit programs.  

Um, and it wasn’t just, I mean, I tell the story about housing. There are books to be written about this, about credit programs on small businesses, on the agricultural sector in so many different arenas of American life. So yeah, there is an origin story here kind of in stages; the early 20th century that kind of set in motion the things that we take for granted today, unfortunately, which is like, Oh, you want to get an education?  

You go into debt. You want to buy a car, go into debt, whatever. That’s a creation. That isn’t a natural market process. And it’s created in large part by public policy, right? And this is back to your original point. Like, you know, people are just really not that conversant in the degree to which public policies and federal ones in particular are constantly structuring the markets that we operate in.  

These are not truly free markets. And yeah, this was well underway before the monetarist revolution. One of the things I’m interested in as a historian is the kind of precursors of that and how those kinds of intellectual and popular traditions took shape. 

Steve Grumbine (26:15): 

Let me ask you. You know, obviously we’ve in a parallel universe, you’ve got the civil rights movement that’s been going on since abolitionists. No, an probably before. 

David Freund (26:24): 

Oh, before. Yeah, absolutely. 

Steve Grumbine (26:26): 

And then you go through this period of time. Is there any documented evidence that people were aware in the moment of what was occurring? 

David Freund (26:36): 

Sure. It depends on which people. That’s a great question. And the answer is super complicated, but it’s going to be different, different periods. And again, it depends on who you’re talking about. As I said before, when a bunch of us were writing a lot about racial inequality in the nineties and the aughts, we knew about this by reading, you know, a lot of work that was already out there.  

Some by academic scholars, a lot by activists who’d been in the front lines on this stuff. So people had been documenting it all along. It’s just that the mainstream history profession wasn’t paying much attention to it. So I was kind of like the second whatever generation of people who are trying to make this more of a prominent story. So that is was in our history text, right? Wasn’t that we didn’t know. Just that people weren’t listening. 

Intermission (27:30): 

You are listening to Macro N Cheese, a podcast brought to you by Real Progressive, a nonprofit organization dedicated to teaching the masses about MMT or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube and follow us on Periscope, Twitter and Instagram. 

Steve Grumbine (28:22): 

You as a historian. 

David Freund (28:27): 

Yeah. 

Steve Grumbine (28:28): 

We see it obviously in the economic profession where the orthodoxy has written the rules. They’ve written the laws. They own the journals. They own the keys to academia. 

David Freund (28:36): 

Right. 

Steve Grumbine (28:38): 

Anybody that speaks out or is heterodox in their thinking is basically ex-communicated. It’s tough sledding to try and find work. 

David Freund (28:46): 

Yes. 

Steve Grumbine (28:47): 

What is it like to be, dare I say, a revolutionary mind in the historical world where you’re actually pulling out these stories. Are you facing similar challenges? 

David Freund (28:58): 

Right. Yes. These are great questions and the answers are complicated. So let me think. I came of age in the profession when a lot of those doors had already been, terrible with metaphors, broken, open. How do you say that? Kick the boundaries have been – whatever, right. So, you know, I was in a position where well, short answer is yes.  

Still a lot of people feel push back at the stuff that a lot of us do, but it’s not at all comparable to say what it was like for people in the generation before me. This legendary book, by a guy named Arnold Hirsch, who was a mentor to a lot of us called “Making the Second Ghetto,” you know, he told me the stories about, you know, his dissertation advisor saying, “why on earth would you want to study how white people in white institutions resisted racial equality?”  

It wasn’t even on people’s radar. So I entered this at a point where a lot more, again, mixed metaphors, whatever a lot more doors were opened to do this stuff. But that said, yes, all of us who do this are constantly being kind of challenged by a lot of people in the profession who were more invested in a kind of conventional wisdom.  

So here’s just an anecdote. Like in the years when I was working on this as a graduate student and writing it, I would tell people that I’m writing about how white people segregated their neighborhoods. And again, why they’re invested in this myth about it. And they would sort of turn, look back at me and say, Oh, so you write African American History?  

I was like, I’m sorry, were you listening to what I just said? Like, there wasn’t a lot of space at the time for people, the profession to think, Oh, if we understand like the systemic origins of this and how people’s ideas are shaped by systems, by the built environment, balancing stuff. So for a lot of us, you know, people were just kind of nodding their head.  

They thought we were doing quote, unquote “civil rights history,” where actually a lot of us were doing was studying why white people resisted the civil rights movement. Right? That’s pretty different. 

Steve Grumbine (30:55): 

Yeah. 

David Freund (30:55): 

So yeah, there are all these different moments. And again, if you talk to people who do a lot of my colleagues are now doing just absolutely stunning work, that is yes, is really upsetting a lot of people in the profession in a way that these topics did say 20 or 30 or 40 years ago. So that’s an ongoing thing that happens a lot in disciplines where people just don’t want to listen to a kind of a critical voice; but ultimately those reshape the way we do this story.  

The most famous, what most, a famous example of this is this. You were mentioning reconstruction. There’s an absolutely stunning history of reconstruction by W. E. B. Du Bois was written in the 1930s; but he was a Black scholar. And he was talking about the prevalence of white violence and reconstruction.  

This was not going to fly in the Academy. So most people in the historical profession ignored it. It’s a brilliant book; it’s still standalone history. It wasn’t until about 40 years later that other people were in a position in the profession to really expand the way that we understood reconstruction and understand the centrality of white violence in that episode.  

And since then you had now this absolute flowering of scholarship, because they Academy at least big branches of it were open to that story. That story was well known, certainly by the people who experienced it, by a lot of people in the late 19th, early 20th century, who had experienced it or heard stories and by scholars who were trying to document that.  

But it’s these institutional shifts that sometimes create a space where you can have much more realistic conversation about what really happened; and you can talk about this about any subfield in history. 

Steve Grumbine (32:44): 

If I look, you know, I come from a different angle with this, and I always look at here’s reality. And I know reality is from various people’s eyes, what they’re seeing and that comes together and it creates, you know, the whole, but there’s a delta there. There’s a huge gap between the told history, the learned history from our institutions and the real history that actually occurred in space that is not been reported, if you will.  

They always talk about history is told by the victors, not the, not the ones, the vanquished, so to speak. 

David Freund (33:22): 

Right, right, right. 

Steve Grumbine (33:23): 

How much of that is at play here? I mean, how much of this history that we learn in school today that really whitewashes these things is a direct result of the victor, so to speak, propaganda. And what is the gap there? How wide is the gap in terms of how much work do we have to do to bring reality more into synchronicity with the truth? 

David Freund (33:45): 

Mm Hmm. Hmm. So much work. Yes. It is about who tells the story. I just referenced to this new study this morning — errors — the coverage in secondary school history books that are published or distributed in California and those in Texas and the kind of stories they tell about American History. So a lot of people are on this, right?  

And there’s this amazing bunch of educators and activists and scholars who are trying to right the ship and get these stories of people who were dispossessed out there. And I mean, literally we could like spend full episodes talking about public history projects that are going on these people’s histories that some of my colleagues are writing about.  

And there’s just so much great stuff. But your question is, you know, why isn’t that more a part of the official narrative? You know, if you catch me on a good day, I think, wow, we’ve made a ton of progress. Like these things are actually breaking in to public discussion in ways that they haven’t in the past.  

And let me give you a concrete example. So for those of us who’ve written about and done work on housing discrimination, we were constantly going out and giving public talks and scholarly talks, whatever, and trying to inform people about this. And especially in like the public history settings, people are shaking their heads.  

Like I had no idea that that happened. That’s really horrifying. Here just in the last five or six years that has shifted. I mean, it’s thanks in part to some people with a high profile, like kind of say, Coates in his reparations piece who read a lot of our scholarship and put this stuff out there to a broader audience.  

And it’s especially, I think a product of activism; and it’s the BLM activism. It’s Me Too activism. It’s a lot of different movements that are like, these stories have been out there. And a lot of the people involved in these activist movements actually know this stuff, but they’re actually kind of demanding that people listen to it.  

So again, on a good day, I’ll say, you know, I’m actually kind of amazed that many people even know what redlining is. More and more when I tell people about this book, if I just know in conversation, it’s like, Oh, you’re talking about red lining HPLC maps. And my jaw will drop. Like how on earth do you even know about that?  

Because I didn’t have those conversations 10 years ago with people. So in some ways there are some, you know, examples where I think we’re really broadening the public discussion. And obviously social media has played a huge role in that as did activists; but there’s still this kind of, you know, fundamental problem, like who publishes the textbooks; who signs off on peer reviewed articles.  

So yeah, these battles are still going on in academic journals, high profile periodicals about what stories we tell and that’s going to be a continuing battle. I mean, to me right now, the most interesting story about this, we don’t talk about, the election cycle is about the kinds of challenges to the conventional wisdom that are now implicated in political speech.  

That’s pretty amazing to me as a historian in the business and somebody who lived their adult life, basically through this. I was 15 when the Reagan Revolution happened. This was the, again, the pool I grew up in. 

Steve Grumbine (37:10): 

Let me ask you, you know, through your book, you know, leading up to the end of redlining, cherry pick a few of the key historical points through that, that the mainstream narrative that was produced through your work, you uncovered some of these juxtapositions. Like you read it in light of it today. It’s just like fantasy pure fantasy, right? 

David Freund (37:37): 

Describing my reaction in the archives. I was doing a lot of this, what????? 

Steve Grumbine (37:40): 

I imagine. So I would love to hear every one of those moments, but give us some of the more salient ones. 

David Freund (37:47): 

One that often comes to mind was, and it’s in there, it’s called property somewhere. And this actually links the two parts of this conversation together. Again, there’s a long tradition of people highlighting stuff and doing activism to stop it. From the beginning, civil rights activists, housing activists were calling on the FHA to knock it off, right?  

And some really famous people like Thurgood Marshall were, I’ve seen correspondence between him and the heads of the FHA saying, “how can you do this? This is blatantly discriminatory. You’re basically, explicitly saying we’ll insure a home loan, but not if it’s for a Black person. We’re only gonna support basically the growth of white neighborhoods.”  

They wouldn’t even insure these loans for the most part to Black people who wanted to live in Black neighborhoods. There are some exceptions, but not many. So it was about this huge, you know, transfer or creation of wealth. So people like Thurgood Marshall and activists are constantly bugging them either in personal correspondence or in public meetings saying, “how can you support something that is so explicitly racist?”  

And again, for people unfamiliar with the FHA, the FHA published a manual, very famous called the Underwriting Manual, which explicitly said to appraisers and realtors do not extend mortgage insurance to someone if they will upset the racial balance or the racial homogeneity of the neighborhood. They basically said, people of color are a risk to real estate.  

It’s in the manual, right? This wasn’t subtle. So activists and critics were constantly saying to them, “how could you do this?” One of the many things I uncovered was a speech that one of the FHA officials gave, I believe it was to a meeting of Black business owners in Washington, D.C. where they said to them, you know, “how can you do this?  

This is insane.” And the head of the FHA looked at them and said, “well, you know, we don’t create the market.” He literally said those words. The market is already there. And again, it’s one of those moments where he was trying to justify racial exclusion by saying, look, we’re not really doing this. This is something that’s outside of our purview.  

This is a natural market for property. Unfortunately, that market does not allow integration; that I was literally in charge of a program that is creating financial capital for people by insuring their loans and making this a win, win situation for banks by the way. And he can literally look at this audience of Black Americans and say we don’t create the market.  

Sorry. And I think in that same speech, he said something like we don’t discriminate against — we’ll use the word at the time — we don’t discriminate against Negroes. Again, the market does that and we just let the market do what it needs to do. And he implied something about how well, you know, most Black people couldn’t afford it anyway, which wasn’t true.  

Most people could not afford to become a homeowner, right? Could you buy a house if you had to put half of the down payment down as a deposit and then paid off in five years? 

Steve Grumbine (40:52): 

Absolutely not. 

David Freund (40:53): 

Right. So what the FHA did was create a mortgage instrument that allowed people, like most people, to buy property, Oh, 30 years, 5% down, something like that, that was literally invented by these federal insurance regulation program. It didn’t exist before that in any kind of significant way. So this is the guy who is literally creating a market and creating opportunities for people saying to critics, look, we’re not creating this market and we’re certainly not discriminating by race. 

Steve Grumbine (41:24): 

Well, what was the rationale for even trying to create that market? What was the point? What problem were they solving? 

David Freund (41:32): 

That’s actually really important. Hopefully I do justice to it in the book. They were responding to a very real crisis. And this is actually I think really important for people to think about who were concerned with our contemporary political moment, because what they’re responding to is the great depression and the great depression was unprecedented.  

And it was putting millions and millions of people out of work. People were foreclosing on their property or they couldn’t afford to rent because they were losing work. It was this absolutely unprecedented collapse of the financial system that had all these reverberations. So with the New Deal well first Hoover briefly in the end of his term, but then especially the New Deal administration under Roosevelt said was where can we stimulate the economy?  

And they knew that building, construction jobs were huge. I think like a third of the people unemployed in the depths of the depression were in the construction industry. So we want to create construction jobs; and we know that people obviously need places to live, so we can focus our energies there as one of the kind of stimulus programs, right?  

Because you know, the New Deal is famously creating jobs through like WPA and CCC. This was seen as a very different kind of solution, but in the end, they were doing a version of that again, by insuring debt and tellingly, they went to, this is actually really revealing — they went to people in the housing industry and in a housing community and said, how can we solve a housing problem?  

And they got two answers. They got one from what I would consider to be very progressive voices, which said, Oh, why don’t we throw a lot of federal resources into building good affordable housing for lots of people in urban areas. And we can also expand transit networks. Oh, doesn’t that sound good?  

And they’re like, Oh, okay. We’ll consider that. Then they went to this other group who said, which was the real estate industry. And they said, why don’t you subsidize bank lending so that we can build a lot of single family homes in the suburbs. And they took that option; and I’m not exaggerating.  

I mean, that was a little bit of a tongue in cheek version of it, but that is basically the path that the federal government pursued. Then people might know about the history of public housing and stuff like that. That got comparatively very little attention and very few resources. Where all the resources went was to basically creating suburban sprawl.  

So in answer your question, they were responding to a very practical problem, really an economic emergency during the 1930s. They put all this infrastructure in place, and then after World War II when they saw, Oh, we need to spur the economic growth again, they were worried about a sinking back into depression.  

They just like, it was pedal to the metal on all these programs. And that’s when the sprawl took off. And when the spike in homeownership took off and think about all of the industries that benefit from building suburbs. I mean, you could probably just think of some of them, like off the top of your head.  

Like what durable goods industries and what parts of the American economy are going to benefit if we start turning farmland into housing development? 

Steve Grumbine (44:45): 

Yeah. I mean, you’ve got lumber, you’ve got steel, you’ve got transportation. I mean, there’s so many. 

David Freund (44:52): 

Oil, right? Cars, everything, plastics and all the durables, and also the consumer goods you need to fill up a big house. So it created this incredible kind of spiral effect where it was constantly, you know, driving the growth. This is why cold war America was so rich. I’m not saying just because of the FHA, but programs like the FHA and federal spending, the regional allocation of spending for the military and stuff like that.  

That’s the story of why postwar America was so incredibly affluent and why so many people got to benefit from it because, you know, this was also a period where there was a larger labor movement and there was more opportunities for people to have union scale jobs. So like all these things come together to help us understand why things were, let’s just say, economically good for lots of people in the 25 years after World War II. 

Steve Grumbine (45:54): 

What jumps out at me talking with various academics and also activists, there’s a genuine resistance from various members of the African American community regarding the term New Deal; and the New Deal wasn’t a New Deal for everybody. It left a lot of people out in the cold, or it didn’t do what it proposed to do for everyone. 

David Freund (46:17): 

Correct. 

Steve Grumbine (46:17): 

And you know, as we’re looking at a Green New Deal today, and I’m looking at parallels between the stories you’re telling and our current structure and our current struggle. 

David Freund (46:25): 

Right. 

Steve Grumbine (46:27): 

This is a very real situation today, even now racism, at least superficially, I’m sure it’s much more concrete than this, but plays into the fear of spending, plays into the fear of who wins and who loses and plays into, in my opinion, or at least I’m guessing here to some extent, educated guess, it plays into the resistance for social programs and things like housing that have been turned into more of a predatory thing than they have a actual benefit to the public purpose.  

So the 99% or however you want to look at this, 

David Freund (47:06): 

Right. 

Steve Grumbine (47:08): 

Explain to me, I guess in the context of your book, you talked a little bit about white flight, not a little bit, a lot a bit. And one of the things that I’m looking at now is places like Flint, Michigan, who are basically just islands of desolation, bad water, bad everything, and the people of color are left in these horrific conditions.  

An this goes back, I guess so much further. It’s very easy to look at it in a current event style arrangement, but this appears to play in an end with the very stories you’re telling right now. 

David Freund (47:44): 

And trust me, those of us who work in these fields, we’re constantly, you know, walking through the world and seeing one of the reasons that a lot of us work on this. We know we want people to understand that practical policy, historical origins of this stuff, it’s not about, you know, some people work hard and some people didn’t.  

Most people work really hard, but that obviously doesn’t sort of play out. And as we know, like a lot of people who were really, really poor in this country are arguably working harder like hours, physical work and street life than a lot of us who are doing a lot better. So the hard work thing, it just doesn’t fly.  

It doesn’t resonate. So in answer to your question, yes. I think a lot of us would argue that what we’re seeing right now is kind of a replay without stretching that comparison too thin, but there’s a lot of similarities between what’s happening literally right now in the United States, it’s political economy and this politics on the one hand and what happened in the twenties and thirties.  

And the political response to this by a lot of progressives is to, and this is not brand new, I mean, they’ve been doing this for as long as I’ve been studying this stuff. They’ve been saying, let’s go back and take what worked. What was good about things like the New Deal and expand them and distribute those resources equitably.  

The civil rights movement went a long way to actually forcing Johnson’s hand to do this in the creation of Great Society Program. But you’re right. The backlash against the expansion of the government often comes when people who are traditionally not as privileged, like people of color and poor communities, when they get to benefit from these programs, programs that have been benefiting the majority, or at least the more empowered people for decades.  

So one of the things that a lot of us, I think we’re trying to do in revisiting all these New Deal policies is show that the New Deal created a lot of privilege, right? And that isn’t a part of the story that’s widely recognized. There’s a misremembering kind of reinvention of the New Deal as something that was temporary, a band aid that, you know, solved some short term problems.  

But in the end we got through that. And then we went back to just pure, like whatever free market capitalism after World War II. And that’s just nonsense. I mean the historical record just doesn’t support it. The affluence of postwar America is a product of state building in the New Deal. And yes, it also discriminated blatantly, as you said.  

It left a lot of people out of the New Deal. So that kind of distorted picture of what the New Deal represented is being used to distort contemporary political debates about, well, what would it mean to have a job guarantee? What would it mean to reassert the right for people to organize, to join unions, to properly fund public education?  

And those are being portrayed as some kind of distortion of a natural process. When in fact, the so called natural world of affluence that a lot of people imagined, it, too, was a product of state intervention. So it’s the kind of caricature of what it means when the government gets involved. But I think it’s doing a lot of damage to contemporary political discourse.  

And to me again, that’s why it’s very exciting to see so many people coming out and saying, no, let’s actually use the state for the public purpose, as we have many times in US History to really good effect. And let’s do that in the post civil rights revolutionary era, the post [inaudible] sellar immigration era and do it equitably.  

Let’s not do it exactly like we did in the New Deal when it was actually pretty messed up for a lot of people. Does that make sense? 

Steve Grumbine (51:33): 

Absolutely. Let me ask you in your perspective, what was wrong with the New Deal and what could we do better in a new, New Deal and a Green New Deal? What are some of the things that we might look for in a more equitable policy space? 

David Freund (51:52): 

Yeah. You ask these amazing, sweeping, wonderful questions. You know, like I want to like answer every part of that stuff, but now I’m kind of trying to like kind of crystallize this, uh, what went wrong. Lots of it went wrong. Again, think about how the New Deal was built — was built by federal officials collaborating with people in the private sector.  

The vast majority of people in power were white men. The vast majority of the private sector people that they turn to for advice were industries dominated by white men. So a lot of their assumptions about racial equity, about the rights of women, about issues of gender norms, those things were kind of baked in for the people who were, these were like, you know, progressive people, [inaudible] people, really believed they wanted to help more people, but a lot of stuff was baked in.  

They created these programs. So in every arena of where the New Deal shaped public life, and again, this is absolutely endless. The stuff on housing is just one little sliver of it. They were producing these public private collaboration. These often state funded, federally funded or managed outcomes with all of these discriminatory assumptions in mind.  

So, you know, maybe the short easy answer is like, let’s redo some of the really positive state building that happened during the New Deal and do it with the perspective of everyone and not have it be, have these kind of blinders on about who deserves access. You know, like one thing that people often point to is the massive subsidies for agriculture in this country, which are in many ways a relic of the New Deal itself.  

But I know it’s always seen as like protecting the American farmer, the majority of these subsidies go to ConAgra or these corporate giants that have basically dominated agricultural production or to at least like large, large landowners in these farming regions. No one calls that welfare. Why not?  

Right? So why not take those resources and use them to do more sort of sustainable, equitable production of foods so everyone can eat. That seems logical, I think, to a lot of Progressives. So what went wrong is that it was a super complicated policy architecture created by the New Deal. And it’s still very much with us, right?  

What went wrong is that a lot of it was designed by people who had assumptions about who deserved and who didn’t. So you can revisit a state building project like that with the public purpose in mind, with a broader set of assumptions about who is the public. And we can do a whole lot better next time. Right? That’s the goal. 

Steve Grumbine (54:39): 

Alright, so David, thank you so much for this. We could go on for hours. This was an amazing conversation and I’ve learned so much. Can you do me a favor? Tell us what you’re working on now and how we can follow your work. 

David Freund (54:54): 

Yes. Thank you again for having me on the show. What am I working on now? I’ve been studying ever since I wrote “Colored Property,” I’ve been very interested in credit markets and myths about credit and money. So what I’m doing now is kind of even more obscure than mortgage markets. I’m writing a book about the early Fed, but more generally what I’m exploring is and learning a lot from heterodox work in economics, I’ve become a pretty careful student of that stuff is thinking about and writing about how people misunderstand money in the modern world in the 20th and 21st centuries.  

So I’m writing this book called “State Money,” which is, and there’s one piece out from that already. And I’ve done some stuff on it as a blog post, and some other things are in the Money on the Left piece. So that’s where people can learn more about what I’m writing on now. 

Steve Grumbine (55:39): 

Well, that’s an incredibly important subject. I hope you’ll come back and let us discuss that in upcoming sequel to this. I really loved talking to you. 

David Freund (55:48): 

I’d be very happy to you. Let’s do it soon. 

Steve Grumbine (55:50): 

Absolutely. All right, folks, thank you so much for joining us at Macro N Cheese. This is Steve Grumbine and David Freund. Thank you again. We’ll talk to you all soon. 

 
End Credits (00:01:35.280)  

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.