Race for Profit is a deeply researched, impeccably argued study of the conception, implementation, and consequences of HUD-FHA's low income housing programs in the late 60s and early 70s. Previously, redlining by the government and the financial sector meant that Black people and Black neighborhoods were--legally--perceived as risky investments due to race. Thus Blacks were overwhelmingly excluded from the rising postwar prosperity enjoyed by whites, who were extended generous FHA loans to buy houses in the suburbs whose value was precisely tied to their location in racially homogenous white neighborhoods.

Federal redlining officially ended in 1968, but racialized residential segregation and wealth disparity did not. That year, in response to residential segregation and housing shortages, Lyndon Johnson signed the Fair Housing and HUD (Housing and Urban Development) Acts into law, which centralized federal housing policy under one department, prohibited explicit racial discrimination in the housing industry, and created a public-private partnership between the government and mortgage banks to incentivize investment and encourage homeownership in black communities. Crucially, the central mechanism created to achieve these goals was heavy government subsidy of private mortgage loans: if a bank offered a standard loan at 8% interest and $1,000 down payment, HUD would pay the lender 7% of the interest and $750 of the down payment, greatly easing the borrower’s financial burden. In addition, the entire loan was guaranteed by HUD, meaning the mortgage banker got paid the full amount of the loan, even if the borrower defaulted. Because it was conceived as a public-private partnership (for reasons that have to do in large part with the ballooning costs of the Vietnam War) HUD’s low-income housing program absorbed the deeply ingrained racial prejudice of the housing industry, a prejudice so integral that it structured the entire housing market, and touched every element of the home-buying process, from mortgage underwriting criteria, to appraisal, to zoning, and more. By completely removing the risk associated with lending to Blacks without remedying the racism of the housing industry, the new program created a perverse incentive for banks to generate as many new loans as possible without ensuring--and often willfully overlooking--their viability (an incentive that was supercharged by the introduction of a new financial instrument called a “mortgage-backed security,” hmmmm). In fact, under this regime, mortgage banks were especially incentivized to loan to buyers who they knew could not afford the terms of the loan, because when the house went into foreclosure, they could buy it again at a low price and start the process anew, getting paid in full by HUD no matter what. These incentives, in combination with disastrously inadequate oversight, meant that poor Blacks in urban neighborhoods with old housing stock were sold homes they couldn’t afford, at inflated prices set by corrupt appraisers, and given no material support should they almost inevitably fall behind on mortgage payments and maintenance costs, leading in most cases to quick eviction from homes they were promised were the ticket to the American Dream. Though the exclusionary race discrimination policy of redlining had ended, HUD’s federal mortgage insurance scheme created a new regime of wealth extraction in Black neighborhoods through a pernicious “predatory inclusion.”

Though Taylor makes clear that it was the combination of racism and profit-seeking in the housing industry that caused HUD-FHA’s low-income mortgage insurance scheme to fail, she also documents the program’s mismanagement under Richard Nixon and his HUD secretary George Romney. Nixon sought to cut back the burgeoning administrative state created to oversee LBJ’s Great Society initiatives. This desire dovetailed with his “southern strategy” of dogwhistle racism to consolidate his white suburban political base. With these goals in mind, Nixon took two measures that effectively doomed HUD’s fair housing initiatives to failure. First, he announced that the federal government would not take punitive measures against white suburban neighborhoods that resisted the construction of low-income housing, even though withholding federal money is the central enforcement mechanism of 20th century American civil rights law. Then, Nixon handed down severe budget cuts to HUD, crippling its ability to properly administer such a large, regulation-intensive program. These two actions greatly exacerbated the existing structural problems involved with the mortgage insurance scheme, nigh-guaranteeing the failures described above. Nixon then blamed this failure on the Black homeowners themselves, taking it as evidence of a deficit of character among Black citizens rather than the result of the racism, profit-seeking, and mismanagement of government and private industry.

The HUD act’s low-income housing scheme fell as part of the wider turn to neoliberalism, which Taylor helpfully reminds us was as much a white backlash against the civil rights provisions of the 1960s as it was a corporate backlash to the stagflation and unemployment crises of the 70s. But its failures were not inevitable. Taylor’s analysis suggests that the program would have been more viable if it did not rely on incentivizing private investment, and if the government took civil rights enforcement seriously (If these seem like unlikely counterfactuals, it’s because American capitalism is deeply racist). But because it was a public-private partnership under the aegis of a large federal agency, and because the government did not take civil rights enforcement seriously, Nixon could paint the mortgage insurance plan as a wasteful government handout to undeserving racial minorities, and then use this as evidence that the welfare state needed to be dramatically curtailed, rather than reinforced. These days, we face a cascading series of crises--climate change, extreme wealth inequality, health care, drug-resistant microbes, and more--that call for massive public investment. Taylor’s book should remind us that there are better and worse ways to structure this investment. First, do not structure the investment around the profit-seeking behavior of private actors. Instead, use social welfare as the basis of taxpayer-funded government investment. Second, do not apportion this investment according to racial or other prejudice. Instead, make sure the programs are well-funded and use existing civil rights law to rigorously safeguard against uneven apportionment. It’s no coincidence that these steps cut directly against the principles of neoliberal governance. They are essential qualities for any program that aims to tackle one of the slow-rolling catastrophes listed above.

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I keep trying to add some personal reflections on reading the book at the end of this review, but I find that nothing I write adds anything substantial to my attempt at a description of Taylor’s argument. It’s an argument so powerful, and so well-supported by original research, that all I can say is that if you are interested in mid-century American politics, structural racism, political economy, housing, or (broadly speaking) justice, you are obligated to find a copy of this book and read it as carefully as possible. The style may be a bit academic (it is adapted from a dissertation), but this is in service of precision, not obfuscation.