We have created a caste system in this country, with African Americans kept exploited and geographically separate by racially explicit government policies.” So writes Richard Rothstein in The Color of Law: A Forgotten History of How Our Government Segregated America. That’s a strong statement. But Rothstein, a research associate of the Economic Policy Institute (EPI) and a fellow at the Thurgood Marshall Institute of the NAACP Legal Defense Fund, provides much support for his claim. He shows how racist Federal Housing Administration (FHA) policies on mortgages, exclusionary zoning laws, state real estate regulations, geographic placement of government schools, urban renewal, and even federal and state highway policies all combined to relegate black Americans to segregated communities. He also blames restrictive covenants in house titles, making an argument so effective that he brought me, a strong believer in property rights, closer to his viewpoint than I would have expected.

Most of the book is a careful historical look at the policies noted above. He could have made an even stronger case by looking at government regulation of labor markets. Disappointingly, Rothstein does not challenge, but instead embraces, the minimum wage, a law that disproportionately hurts black Americans and was intended to do so. He seems not to be aware of this.

Toward the book’s end, he proposes a series of policies, ranging from extreme to moderate, to remedy the damage done by over half a century of destructive government policies. On the more extreme policies, such as large subsidies to black Americans, I find him unpersuasive. One of his more moderate policy proposals, on zoning, is attractive.

Insuring “black” mortgages / One policy that Rothstein faults is the FHA’s historical unwillingness to insure mortgages for black homebuyers and its opposition to racial mixing in neighborhoods.

In 1941, for example, a real estate agency representing a new development 20 miles west of Newark, NJ tried to sell 12 properties to middle-class black people. They had good credit ratings and banks were willing to lend to them if the FHA would approve. But the agency refused, declaring, “No loans will be given to colored developments.”

Another example: In 1958, a white San Franciscan named Gerald Cohn bought a house in Berkeley and, not ready to move in, rented it to a black man named Alfred Simmons. The FHA then blacklisted Cohn, telling him that he would be “denied the benefits of participation in the FHA insurance program.” The director of the agency’s office in San Francisco wrote Cohn to tell him that any application for mortgage insurance that he made in the future “will be rejected on the basis of an Unsatisfactory Risk Determination.” Naturally, the FHA had no way of knowing whether Cohn would be a bad risk in the future. Instead, the agency was, rather blatantly, communicating its displeasure with Cohn’s renting to a black man.

These were not isolated cases. The FHA’s 1935 underwriting manual for real estate agents states, “If a neighborhood is to retain stability it is necessary that properties shall continue to be occupied by the same social and racial classes.” The manual also states that natural and artificially established barriers would protect a neighborhood from such “adverse influences” as “inharmonious racial groups.” Although those last three words were excised from the 1947 edition of the manual, it still recommends valuations based on “compatibility among the neighborhood occupants.”

Exclusionary zoning / Another segregating measure Rothstein documents is exclusionary zoning.

He notes that in its 1917 Buchanan v. Warley decision, the U.S. Supreme Court overturned an explicitly racial zoning ordinance in Louisville, KY. The Court “ruled that racial zoning ordinances interfered with the right of a property owner to sell to whomever he pleased.” In response, those who wanted segregation employed a number of tactics. One was, believe it or not, to ignore the Supreme Court ruling, as the West Palm Beach, FL government did from 1929 to 1960.

A more common tactic was to use zoning to forbid all but single-family houses. Most black people could not afford them. In St. Louis, writes Rothstein, Harland Bartholomew, a full-time planning engineer, proposed rules “to prevent future multifamily, commercial, or industrial structures from impinging on single-family neighborhoods.” So if single-family houses in a neighborhood “had deeds that prohibited African American occupancy,” this “made it almost certain that the neighborhood would be zoned ‘first-residential,’ prohibiting construction of anything but single-family units and helping to preserve its all-white character.”

Another measure by the St. Louis zoners was to permit polluting companies, nightclubs, liquor stores, and prostitution houses in black neighborhoods but not in white ones. Rothstein doesn’t explain clearly why this would reinforce segregation. Presumably, what he has in mind is that allowing these other uses would reduce the value of houses, making them more attractive to black people who, presumably, could afford less. One can certainly see his point with polluting companies and, most likely, prostitution houses. But with respect to liquor stores and nightclubs, it’s not clear to me which group was unfairly harmed: blacks or whites. I live in a mainly white city that didn’t allow liquor stores until the late 1960s and still doesn’t allow nightclubs. That makes my life worse, not better.

Realtors and schools / One way that state governments enforced housing segregation was with regulations on the conduct of realtors. Real estate boards, writes Rothstein, “expelled brokers who sold to African Americans in stable white neighborhoods.” Without the power that state governments had given to real estate boards, those brokers could not have been expelled. This happened not just early in the 20th century, but much later also. Rothstein tells of a case in Sarasota, FL in 1963 in which a real estate board expelled a member for selling to a black doctor in a white neighborhood.

Local governments also segregated with their decisions on where to locate government-owned schools. Just after World War I, for example, local governments in Atlanta closed schools for whites “if they were in zones designated for future African American residence, and schools for African Americans were closed if they were in zones reserved for whites.” This school location policy hurt whites as well as blacks. The Atlanta School Board, dealing with an overcrowded situation in a mixed-race area, built a new junior high school for whites in the far northern suburbs, prompting white families to move to that area and, therefore, causing more segregation.

Subsidizing whites / Local governments sometimes used government subsidies combined with eminent domain to displace people and then build housing for whites only.

One such major project in 1942 was the 9,000-unit Stuyvesant Town complex in east Manhattan. New York City’s government “condemned and cleared eighteen square city blocks” and then transferred the property to Metropolitan Life Insurance Company, even though the company explicitly intended the housing for “white people only.”

The apparent good news is that in 1950, New York’s state legislature passed a law “prohibiting racial discrimination in any housing that received state aid in the form of a tax exemption, sale of land below cost, or land obtained through condemnation.” So Met Life agreed to lease some apartments to black people. Here’s the problem: During World War II, New York City’s government had imposed rent control as what was then described as a temporary measure. But the policy ended up not being temporary. Rent controls keep rents below market levels, causing shortages and discouraging mobility. So there were few apartments available for black people.

Governments also used highway placement policies to run interstate highways through urban black communities. While it is not completely clear why this would cause more segregation, what is clear is that losing their homes to eminent domain would reduce black households’ wealth and make it even more difficult for them to buy homes in middle-class areas. One haunting photo in the book is of poor black children in Miami looking on as the first wrecking balls destroyed a black neighborhood to make way for I‑95.

Restrictive covenants / One way that developers assured home buyers that they would be able to live in neighborhoods without races or ethnic groups they wanted to avoid was the use of restrictive covenants. I had always thought that such covenants, although personally offensive, should be legally allowed. I think people should be able to decide, by voluntary contract, whom they live next to. Anyone who buys a property and signs the deed is agreeing to whatever conditions are in the deed.

But Rothstein, who opposes restrictive covenants, has moved me a little closer to his position. How? He points out that local governments often “aggressively promoted such covenants.” In 1943, for example, the city attorney of Culver City, CA instructed air raid wardens that when they went door to door to make sure families turned off their lights in the evening, they “should also circulate documents in which homeowners promised not to sell or rent to African Americans.” That was wrong for two reasons: the government was taking advantage of people while they were most fearful, and, more important, it was none of the government’s business.

Minimum wage / My major disappointment with the book is that Rothstein could have made his case even stronger by discussing how minimum wage laws hamper the economic development of relatively unskilled black people.

Rothstein references a section of An American Dilemma, the 1944 classic on race in America by the late Swedish economist and Nobel laureate Gunnar Myrdal. In it, Myrdal tells how the U.S. Employment Service, a federal agency, refused to enroll black people for skilled work. But that agency was tiny and the harm it did does not come close to the harm the federal government has done with its minimum wage. The person who laid this out eloquently was none other than Myrdal, just 21 pages earlier in his book. He wrote:

But it has been mainly [black workers’] willingness to accept low labor standards which has been their protection. When government steps in to regulate labor conditions and to enforce minimum standards, it takes away nearly all that is left of the old labor monopoly in the “Negro jobs.”

It was well understood from the time of the federal minimum wage in 1938 until the late 1950s that one major goal of minimum wage proponents—many of whom were union officials representing white unions—was to wipe out competition from black people. For instance, in 1957 during a hearing on the federal minimum wage, here’s what a U.S. senator from a New England state said in defense of the minimum wage:

Of course, having on the market a rather large source of cheap labor depresses wages outside of that group, too—the wages of the white worker who has to compete. And when an employer can substitute a colored worker at a lower wage—and there are, as you pointed out, these hundreds of thousands looking for decent work—it affects the whole wage structure of an area, doesn’t it?

That senator was John F. Kennedy, who understood one of the main purposes of the minimum wage. It’s possible Rothstein is not aware of this history. As noted, he’s a research associate of EPI, which strongly advocates for higher minimum wages. I’ve never seen EPI address the sordid history of support for the minimum wage.

What to do? / Rothstein’s absence of a critical view of the minimum wage carries over to his proposals to remedy the large amount of segregation that remains in America. He advocates returning minimum wages to their historic level. He clearly means that the minimum wage should be raised substantially, not realizing the damage this would visit upon black youths trying to get into, and make their way up in, the labor market.

Rothstein also advocates other policies that he admits are extreme. One is to have the federal government buy up, at market values, “the next 15 percent of houses that come up for sale in Levittown” and then “resell the properties to qualified African Americans for $75,000, the price (in today’s dollars) that their grandparents would have paid if permitted to do so.” Put aside the unintended consequences, one of which would be huge discord in the black community when only a lucky few would get the properties; this proposal is unjust. To pay for these subsidies, Rothstein advocates taxing regular taxpayers, almost none of whom are responsible for these policies.

To the charge that his proposal is a form of social engineering, he replies that desegregation “would attempt to reverse a century of social engineering on the part of federal, state, and local governments that enacted policies to keep African Americans separate and subordinate.” Good point. But that doesn’t mean that his proposals are not social engineering.

His main rebuttal is that “too few whites were terribly concerned with that kind of social engineering, and it’s a bit unseemly to make that objection now.” Really? Because our grandfathers didn’t object to one form of social engineering, we can’t object to another? That’s weak.

To his credit, Rothstein does propose one policy that I can totally support: “a ban on zoning ordinances that prohibit multifamily housing or that require all single-family homes in a neighborhood to be built on large lots with high minimum requirements for square footage.” He understands that such supply restrictions drive up the price of housing, a situation that has reached crisis proportions for blacks and whites alike on both coasts.

What federal, state, and local governments did to segregate black Americans in the last century was horrible. It’s important to help the descendants of those victims. But it’s also important to not victimize other innocent people.