Gentrification and Racial Arbitrage

June 2nd, 2014  |  Published in Everyday life, Political Economy, Politics  |  6 Comments

This post spins out something that occurred to me in the course of writing about consumerist politics and its limitations. One of the sections concerns gentrification, and the political dead end of blaming it on what Anthony Galuzzo called “the fucking hipster show”.

Artists, students, and others classified as “hipsters” are often blamed for gentrification, rather than being understood as people who are often driven into poorer and browner neighborhoods by large-scale processes rooted in capital accumulation and government policy. This creates a divisive cultural distraction from the need to organize neighborhoods across race and class lines. I go into that in more detail in the forthcoming essay. But I had an odd thought about the racist dimension of gentrification that didn’t fit in there.

Racism is a central, unavoidable component of the whole process of gentrification in places like the United States. Landlords in non-white areas perceive that if they can bring white people into a neighborhood, they will attract more people like them. At first, the newcomers may be the low-income hipster types, but they are the pioneers who make the area safe for colonization by the rich. The ultimate outcome is that the non-white residents get priced out and displaced, along with the original gentrifiers. It’s a process that’s been repeated so many times in recent decades that that it barely needs explaining anymore.

But it occurred to me is that the first wave of white gentrifiers are engaging in what we might call, by analogy with finance, a kind of racial arbitrage. Arbitrage is the practice of exploiting differences in prices for the same good in different markets. When such discrepancies appear, it can be possible to make risk-free money by buying out of one market and immediately selling into another.

Early gentrifiers aren’t engaging in arbitrage in this strict sense; the gains that go to early home-buyers, for instance, are consequences of the unfolding of the gentrification dynamic itself and not of some market imperfection in static comparison. But in the early stages, racism gives rise to a situation where the perception of certain neighborhoods diverges from their lived reality. A white person who notices this can exploit it to procure housing at a discount.

This is primarily because, all things being equal, white people perceive a neighborhood as having more crime the more black people it has in it. Blacks are, in fact, more likely to live in high crime areas, but white perceptions go beyond this reality (see the linked paper for a detailed study). A white person who knows this will realize that an apartment in a black neighborhood will be systematically cheaper than the same apartment in a white neighborhood. By renting in the black neighborhood, whitey gets a discount without actually facing any additional danger.

The size of this discount is magnified by a second aspect of white racism about black crime. This one relates not to how much crime there is, but to what drives crime, and in particular violent crime. Many white people believe that rather than having a rational basis, violence in black neighborhoods is driven by some kind of cultural pathology or inherent animalistic nature. We therefore come to believe that mere proximity to black people puts us in danger.

This is illustrated in the recent, excellent debate between Ta-Nehisi Coates and Jonathan Chait. (Excellent on Coates’ side, that is. Chait’s contribution consisted of digging himself into a hole, then calling in a backhoe.) Chait, like many white liberals, tends fall back on nebulous ideas of black cultural pathology to explain why black people face higher levels of violence and poverty. The primary difference between people like Chait and his conservative counterparts is Chait’s magnanimous acknowledgment that black pathology stems from the legacy of slavery rather than inherent inferiority.

Coates demolishes this whole patronizing and misbegotten enterprise. Drawing on his own experiences growing up in Baltimore, he shows how violence and machismo can be understandable and even necessary ways of surviving in a tough environment. “If you are a young person living in an environment where violence is frequent and random, the willingness to meet any hint of violence with yet more violence is a shield.”

But white gentrifiers moving into black neighborhoods don’t face anything like this same environment of violence. For one thing, a major source of random violence in black communities is the police, who certainly don’t treat white newcomers the same way. For another, these newcomers are disconnected from the social networks, and the legal and illegal economies, on which many urban residents depend for survival, but which can also be suffused with violence. Certainly, white gentrifiers may be subject to property crime if they are perceived as rich or as easy marks. But the notion that they face the same murder rate as their black neighbors is simply preposterous. (For women, of course, there is an additional set of concerns about safety. But here, too, there can be an overestimation of the likelihood of being raped by a strange black man rather than the pleasant-seeming friend who might even claim socialist politics.)

Nevertheless, when I’ve mentioned the possibility of moving to a high-crime, predominantly black neighborhood, I’ve heard jokes—even from leftist comrades—along the lines of “heh, only if you want to get shot”. These are, presumably, people I won’t have to compete with for an apartment. Hence the racist perceptions of crime’s sources and targets drives down rents further and compounds the racial arbitrage.

The anti-racism of the early arrivals, then, is what helps start the whole process of revaluation and displacement. There’s an almost absurd quality to it: white supremacy is so pervasive, and its structural mechanisms so powerful, that even white anti-racist consciousness can be a mechanism for reinforcing white supremacy. It’s an important lesson that shows why anti-racism isn’t just about purifying what’s in our hearts or our heads. It’s about transforming the economic systems and property relations that continue to reproduce racist practices and ideas.