The Color of Money Edition

Summary

Slate Money: "The Color of Money Edition"

Date: February 23, 2019
Host: Felix Salmon (Axios), co-hosts Anna Shymansky, Emily Peck
Guest: Mehrsa Baradaran (Author, "The Color of Money: Black Banks and the Racial Wealth Gap", Professor of Law at University of Georgia)

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Episode Overview

This episode dives into the persistent racial wealth gap in America, with a special focus on the history and economics of black banking, the legacy of segregation in finance and housing, the legacy and rhetoric of "black capitalism," reparations, and public policy interventions like opportunity zones. Guest Mehrsa Baradaran brings expertise from her groundbreaking book The Color of Money and her research on the limitations of market-based solutions to structural inequality.

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Key Discussion Points & Insights

1. The Historical Limits of Black Banking

• Black banks as a stopgap: The episode opens with a historical overview, noting black banks were often positioned as the solution to black economic exclusion. However, the structure of the banking system, segregation, and racist policy meant these institutions could not build real wealth in black communities.
  • Key Insight: “As soon as you make a loan, that asset... is owned by some white person, usually because of the history of capital and who had it. And so as soon as you make that loan, you're seeing this money leak out of the community.” – Mehrsa Baradaran [02:00]
  • Black banks had smaller, more volatile deposits, higher risk loans, and lacked profitable lending opportunities, setting them up for failure.

2. How U.S. Policy Entrenched the Racial Wealth Gap

• From Reconstruction to the New Deal: Baradaran describes how, post-Emancipation, the U.S. offered black Americans banks instead of land, replicating, not remedying, injustice.
  • Slaves as capital: A shocking historical note is made on how the slave economy was systemically financialized, with slaves used as collateral and assets (securitized and insured).
    • “Slaves were not just slaves but they were collateral... collateralized slave obligations ... a sophisticated financial system set up around a slave-based economy.” – Felix Salmon [06:00]
  • New Deal as ‘policy apartheid’: Policies like the FHA and Homestead Acts created generational white wealth via homeownership, deliberately excluding black Americans. Baradaran calls this “policy apartheid.”

3. Reparations and the Myth of Market Solutions

• Reparations as rectification, not charity: Baradaran rejects simplistic debates over “capitalism” or “socialism,” emphasizing reparations address the extraction of wealth over generations through racism. She notes 13th, 14th, and 15th Amendments' promises were never meaningfully enforced.
  • “You have been suffering... we need to make it right... Call it reparation, call it justice, call it whatever you want, I don't care. We just need to put capital or land or whatever the modern equivalent is of that wealth that was created for whites and not for blacks.” – Mehrsa Baradaran [10:00]
• Stark statistics: Baradaran repeats a core fact: Black Americans had only 0.5% of U.S. wealth at emancipation, and today just 1.5%. White families have 22 times the wealth of black families. [10:50, 36:35]

4. Housing as Both Cause and Partial Solution

• Housing policy as the root: Government-sanctioned redlining and exclusions created vast disparities in generational wealth.
  • “Housing is the root of the problem. I don’t know if it’s the solution, but it’s a start... for most people ... the house is still their primary asset.” – Mehrsa Baradaran [11:40]
• Caveats: Efforts to address the gap via housing must contend with places where property values are stagnant or declining.

5. Populism, Race, and Political Realities

• Populism’s racial compromise: Policy victories in the Progressive and New Deal eras relied on alliances with white supremacist Southern Democrats; left-wing economics often limited to whites, excluding blacks.
  • “The New Deal was built on white supremacy... They were able to convince white workers to use whiteness as opposed to their interracial solidarity.” – Mehrsa Baradaran [12:40]
• Race vs. class: Baradaran criticizes attempts to frame inequality as “either/or”—race and class are deeply intertwined.

6. Opportunity Zones & Market-Led “Revitalization”

• Cyclical, bipartisan market “fixes”: Opportunity zones are framed as the latest in a long line of bipartisan market-driven schemes (from Nixon’s “black capitalism” to Clinton’s “empowerment zones”) which promise investment but rarely transfer wealth to black residents.
  • Opportunity zones offer capital gains tax breaks for investing in designated areas; Baradaran points out the benefits primarily accrue to wealthy investors, with little real wealth-building for community residents.
    • “If we're measuring ... increased employment and investments and money, great. What I'm trying to measure is community wealth building. This is not the answer... the investors are always going to be the people with capital...” – Mehrsa Baradaran [20:24]
  • Revitalization may lead to gentrification, displacing residents who were meant to benefit.

7. Amazon HQ2, Corporate Subsidies, and Regional Inequality

• Amazon’s botched New York bid: The hosts analyze Amazon’s failed HQ2 project in Long Island City, pointing out that cities compete for subsidizing corporations, ultimately racing to the bottom and forfeiting vital public funds.
  • “You can’t have cities and states competing... to see who can offer the greatest tax breaks to corporations, because that just results in corporations paying no taxes.” – Felix Salmon [30:14]
• What actually revitalizes cities? Baradaran suggests the public sector—via infrastructure, housing, and creative programs like a 21st-century Homestead Act—is better equipped, and cites postal banking as an example of overlooked public innovation. [33:22]
• Public works vs. tax breaks: New York would give $3B to Amazon but balks at reparations—revealing a double standard in public spending on corporate welfare vs. reparative justice.
  • “We only ask, how are you going to pay for it? When it's like a social benefit, we don't ask... when it's this massive tax cut.” – Mehrsa Baradaran [35:40]

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Notable Quotes & Memorable Moments

• On black banking’s built-in limits:

  “Black banks have these other services; as a wealth building mechanism, they’re not useful, they're not harmful, but they're... not the answer. The problem is that white policymakers have kept pushing this segregated banking system as an answer to the racial wealth gap.” – Baradaran [04:31]

• On the legacy of the New Deal:

  “The New Deal was built on white supremacy... They were able to convince white workers to use whiteness as opposed to their interracial solidarity.” – Baradaran [12:40]

• On opportunity zones:

  “This is not new. It is so Nixonian... it is basically the market’s response to the ghetto.” – Baradaran [17:42]

• On subsidies and reparations:

  “We're willing—New York's willing to give Amazon $3 billion in tax breaks. But if we say, what about reparations? People are like, we don't give away money.” – Emily Peck [35:31]

• On persistent wealth inequality:

  “White families have 22 times the wealth of black families.” – Baradaran [36:35]

• On structural disadvantage:

  “A third of black families have zero to negative wealth.” – Baradaran [38:19]

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Key Segment Timestamps

• 00:29 – 02:54: Introduction to black banks and why they couldn’t build black wealth
• 05:34 – 06:30: The Freedmen’s Bank and financialization of slavery
• 08:44 – 09:13: The discriminatory New Deal and its legacy
• 09:33 – 10:50: Reparations: what’s owed and why
• 11:15 – 12:40: The role of housing policy in the racial wealth gap
• 14:30 – 15:19: Intersection of race and class; the political calculus of populism
• 16:11 – 22:17: Opportunity zones & policy critique—why investment doesn’t build local wealth
• 24:57 – 30:41: Amazon HQ2, subsidies, and the flawed race for economic growth
• 33:22 – 35:29: Homestead Act proposal, alternative public policy routes
• 35:31 – 35:59: Contradictions in prioritizing corporate tax breaks over reparations

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Numbers Round: Noteworthy Stats

• “White families have 22 times the wealth of black families.” (Baradaran, [36:35])
• “Black Americans had only 0.5% of U.S. wealth at emancipation, and today just 1.5%.” (Baradaran, [10:50])
• A third of black families have zero to negative wealth. (Baradaran, [38:19])
• Amazon’s $3 billion in targeted tax breaks from New York.
• Minotaurs: There are 55 private startups that have raised over $1 billion in equity capital. (Salmon, [37:19])

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Episode Tone

Dense, thought-provoking, analytical, with moments of wit and pointed critique. Baradaran’s factual clarity and the hosts’ persistent questioning keep the discussion grounded and urgent, highlighting not only the historical context but also present-day policy stakes.

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For Further Exploration

• Mehrsa Baradaran, The Color of Money: Black Banks and the Racial Wealth Gap
• Slate Money, previous episodes on public policy and corporate incentives
• Current debates on reparations and policy-based wealth redistribution

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This summary is designed for listeners and non-listeners alike seeking to understand the breadth and depth of the conversation on black wealth, historic injustice, and modern policy failures in the U.S. economy.

Transcript

[Anna Shymansky]

Hello.

[Felix Salmon]

And welcome to.

[Mehrsa Baradaran]

So good to see you.

[Anna Shymansky]

Sorry.

[Felix Salmon]

No, no. Yes. Mehrsa, introduce yourself.

[Mehrsa Baradaran]

I am Mehrsa Bharadaran. I am the author of, most recently, the Color of Black Banks and the Racial Wealth Gap. And I'm also a person professor of law at the University of Georgia.

[Felix Salmon]

And so we are going to have a whole Color of Money edition in honor of Mehsur Bharatiran. We are going to talk about black banking. We are going to talk about black wealth. We are going to talk about reparations. We are going to talk about opportunity zones. We are going to talk about history. We are going to put this all in context. We are going to go back centuries. We are going to talk about Haiti. We are going to talk. You have no idea how much amazing knowledge is gonna get dropped in a relatively short podcast. This is going to be dense, fun, interesting. It's gonna be not just me, I said, but it's gonna be me. I should introduce myself. I am Felix Salmon of Axios. It is going to be Anna Shymansky. Hello. And also Emily Peck of the Huffington Post.

[Emily Peck]

Hello.

[Felix Salmon]

And all of this is gonna be coming up right here on Slate. Money. So let's start with your book.

[Mehrsa Baradaran]

Yes.

[Felix Salmon]

Which. Which has been out for a while and everyone has read it already. But for those people who haven't read it already, what's it called?

[Mehrsa Baradaran]

It's called the Color of Money, Black Banks and the Racial Wealth Gap.

[Felix Salmon]

And this is an amazing history of black banking in America. And not just black banking, but also just the way that African Americans found it incredibly hard to hold onto their money. And they tried to create their own banks, which you would think would help them hold onto their money, but it didn't really work out that way.

[Mehrsa Baradaran]

Yeah, I mean, if you look at the way banks work, right, you need, you know, there's fractional reserve lending, right? So the money multiplier works if you're able to do fractional reserve lending, but you have to be part of a network of other banks so that that lending creates money. But it doesn't work if you have a segregated black bank whose you can take deposits from black depositors and you can lend to black borrowers, but there's no way to, you know, quote, unquote, control the black dollar, which was the. The main purpose of these banks. Because as soon as you make a loan, that asset, whether it's a house or a company or whatever, is owned by some white person, usually because of the history of capital and who had it. And so as soon as you make that loan, you're seeing these. This money leak out of the community. And it would work if they were lending back in.

[Felix Salmon]

So basically, you will lend. You'll lend money to an African American borrower to buy a house. But when they buy the house, they're invariably buying it from a white person. So the cash winds up going to a white person and the money leaves the black community.

[Anna Shymansky]

And also, I think you point out that the banks were essentially set up to fail because their depositors, they tended to be smaller deposits. It was a bit more erratic. And then a lot of their loans were a little bit riskier. They couldn't sell the loans. And throughout a lot of history, unfortunately, if you want lent to an African American, then the loan would immediately be. The value would decline. So these. Yes, these banks were set up to fail.

[Mehrsa Baradaran]

Yes. I mean, they didn't know that and nobody was doing it cynically, but absolutely right. So the deposits are bank liability. So these are little mini loans that you're giving a bank. And banks don't want less than $2,000 or 2500, whatever their profitability ratio is. I mean, these days, banks are just getting their money from reserves anyway. But in the old days, you actually needed deposits to make loans to some extent. And so if they're getting from wage earners, which, you know, most blacks, because of, you know, segregation and discrimination, were just, you know, low wage earners. So their deposits are very volatile and very risky. And so they have to one offset them, you know, on the asset side. But also there are a lot of operating costs to these deposits. Right. The asset side, that's where you're making the money are on loans. Right. So there aren't big businesses to lend to that's more profitable. And the, the home mortgages that they're paying for are in rapidly devaluing properties. So the first black families that move into a neighborhood, and this is unfortunately not exactly, but kind of the first black families move into a neighborhood, pay a premium or whatever the market rate is, and then as soon as a neighborhood tips into a black neighborhood, those values plummet. And because of the market sort of embeds racism. We don't want to have black neighbors. We don't want to live in a black neighborhood.

[Felix Salmon]

So does this mean that, like, black banks are a bad idea and it's good that we basically don't have any anymore?

[Mehrsa Baradaran]

Yeah, so I'm. I'm careful not to make that because I think one of the things that black banks have done over their history and this was just a really inspiring sort of look at this. History is black banks have become, had been the sort of site of protest and community boycotts. So mlk, Malcolm X, Jesse Jackson, who is just with today, I mean they've used these black banks as a method of protest and a community sort of empowerment. And you know, black banks weren't giving subprime loans during the run up to the crisis. So you have these black banks that are actually a shield against exploitation. So they have these other services as a wealth building mechanism. They're not useful, they're not harmful, but they're not, they're not the answer. The sort of silver bullet. And the problem is that white policymakers have kept pushing this segregated banking system as an answer to the racial wealth gap.

[Emily Peck]

It seems like, I mean that's the thread running through your book from the very start from the Freedmen's bank. It's like, well we're not going to give you any land, but here you can have this bank and then the guy running the bank will basically steal all your money.

[Mehrsa Baradaran]

Exactly.

[Anna Shymansky]

Good luck.

[Mehrsa Baradaran]

Yeah. And steel is strong. I mean they call it looting. But he just expect. Speculated in a way. So let me go back. I mean there's two pivotal points in history, Reconstruction and the civil rights movement, where the black community, you know, rightfully says we need justice from these like history of, I mean during Reconstruction is like enslavement for hundreds of years. Like at least give us the land that we have worked for hundreds of years.

[Felix Salmon]

And I'm just going to jump in very quickly because the one thing which really jumped out at the book and I haven't been able to stop thinking about since I read it, was this thing about how slaves were not just slaves but they were collateral and you got like, you had sort of collateralized slave obligations and they would become financialized and securitized. It was the most astonishingly like terrifying but also sophisticated financial system set up around a slave based economy.

[Mehrsa Baradaran]

Absolutely. I mean the new history of capitalism sort of literature is really excellent on this and I've been able to use a lot of that. That wasn't around before, but in the last five or six years there's been a lot of great sort of balance sheet analysis of slavery. How do they collateralize? How do they use slave bodies, men and women? They're insuring them. They're you know, by getting other loans based on this collateral and they're sort of bundling them and securitizing them. And it's not just a southern thing. Right. So these are the planters in the south that own the collateral. But it's New York merchants and Liverpool, you know, traders that are also using these slave bodies as money. And then, of course, the cotton that they're picking, that's the least of it. But. But yes, the slave bodies bodies were capital themselves. And so you have this transition from being capital to trying to become capitalists. And so they're saying, all of the abolitionists, who are serious abolitionists and Frederick Douglass and others are saying, you need land without land, freedom and participation in capitalism. That's a farce. And they were right. Because what the cotton traders did not want is for the US to go the way of Haiti. And when you have land, when you own land, you're going to grow subsistence crops because you're going to eat, Right? And cotton is a debt crop. Cotton is not. I mean, it's profitable when it is, but it's not a way to feed a family. And so they knew then in Haiti, they just stopped growing the slave crops and they started growing subsistence crops. And so the, the north and, you know, the merchants in Great Britain were saying, we can't have this. So that's why they couldn't have land. So instead of land, they got the Freedmen's Bank. Same with civil rights. And civil rights, you know, there's different groups saying, we want integration, so we want to move in your neighborhood because we've been prohibited. So we want to cut into this FHA mortgage thing and. Or we want reparations. And those were serious plans. And Nixon sort of does this thing again that was happening with the Freedman's bank is like, have, have black capitalism, have treasury deposits in black banks and we'll do contract set asides. Affirmative action was a Nixonian thing. So it's really just using sort of the rhetoric of free market capitalism against these demands and these demands that were, you know, you have unjustly discriminated against us by state policy. And so what these leaders, Johnson and Nixon are saying and others are saying, the market will fix the thing that state policy, backed by violence, by the way, created.

[Emily Peck]

And that's the. That was so interesting to me because the other pivot point you really focus on in the book is, of course, the New Deal. And that was, I think, at one point you call it, or someone calls it policy apartheid, because it was like, here was the government and public policy coming in to rescue all these people and help them become homeowners. But not black people.

[Mehrsa Baradaran]

Exactly.

[Emily Peck]

They basically get pushed out. So it's like they get the free market capitalism solution and everyone else gets the socialist solution. And we call that the American dream.

[Felix Salmon]

So instead of land now, I mean, we have to talk about this because it's now on the agenda. Thank you, Elizabeth Warren. Are reparations the new 40 acres? Is this going to be another thing that people are gonna talk about for however many years and nothing's gonna happen? Or like, talk a little bit about reparations thing?

[Mehrsa Baradaran]

I mean, I think sometimes we get caught up in terminology like capitalism, socialism. Reparations is another one of these things where everyone thinks of reparations and like their cartoon bubble just doesn't match up. Right. And so what I'm saying is 40 acres, or mule, whatever, the anti redlining thing is, wherever you want to sort of peg that claim. The claim is that state policy has extracted labor and goods from the black community and has given whites, I mean, not just fha, homestead acts and all of these stuff that were racially exclusionary for generations. And so somehow that needs to be remedied. So South Africa has truth and reconciliation. You know, the Nuremberg trials. There is a sense of like, you have been suffering, you have suffered an injustice, and we need to make it right. And all the civil rights acts do, and I don't want to underplay them, but what the 1965 and the voting Rights Act Civil Rights act does is guarantee to the black population the rights that they were already guaranteed in the 13th, 14th and 15th amendment, right? Now we're saying we're serious this time, right? It doesn't do anything to remedy that past injustice. And so call it reparation, reparations, call it justice, call it whatever you want, I don't care. We just need to put capital or land or whatever the modern equivalent is of that wealth that was created for whites and not for blacks.

[Felix Salmon]

Because the, the statistic you, you have in your book, which I think is not as well known as it should be, is that during slavery, before slavery was abolished, blacks in America had about 0.5% of the total wealth. And now we have abolished slavery, and that 0.5% has gone all the way.

[Mehrsa Baradaran]

Up to like 1.5%. Exactly.

[Anna Shymansky]

And isn't a lot of this story around housing? I mean, I think this is what you seem to say in the book, and I think it makes a lot of sense looking at government policy, as you know, Emily, you also mentioned what the FHA loans did in order to create a white middle class, to create white wealth. And I guess I'm just thinking in terms of policies moving forward, if housing is one of the biggest differences, is that an area to focus on?

[Mehrsa Baradaran]

Yeah. So housing is the root of the problem. I don't know if it's the solution, but it's, it's a start. I mean, the rule of capital is those who have it just make more. Right. So those who own slaves as capital got to own property later. Right. And use that stuff to own whatever it is. So now we're talking about like, you know, the tech capital that is capital without actually land. So whatever it is, those who had capital are still going to have capital. Right. JP Morgan is going to be around for as long as money is around. Right. And so, so maybe the future, the remedy isn't in housing, but that's certainly the cause. I happen to think that housing has to be a part of it because for most people who don't have, you know, 401ks and stocks and all that stuff, the house is still their primary asset. Now we have to talk about what kind of loan, where is the house? And there are places in America now where that house isn't worth. It's not holding their equity, it's diminishing. And so we have to put caveats in it. But yes, that is the cause of it. And I want to say, I want to point out something about the New Deal as well. I mean, we talk about the New Deal and the, you know, the Progressive Era reforms of the Wilson administration and on. So we leftists, and I'm going to include myself proudly as a leftist, kind of want to redo the new. So we're seeing like the new Green, the New Deal, the Green New Deal, the Progressive Era, like new Progressives. And I want, you know, one of the things that's missed is okay, we're do the New Deal, but we're not going to have the oversight or the blind spots or the gaps that it had last time, which were race. But the New Deal was built on white supremacy. The Progressive Era reforms that the Wilson administration and the FDR administration pushed were pushed by Southern Democrats. They were pushed by populists. And the early populist movement was an interracial movement, but not the later one. And so the later movements, the Wilson administration is a white supremacist administration. They're able to pass these laws because they're able to convince white workers to use whiteness as opposed to their interracial solidarity.

[Emily Peck]

I mean, that seems to be the big political question right now is if you can do populism without the racism Because Trump won on the populism with the racism.

[Mehrsa Baradaran]

Yes, we have to. And I think this. The thing that I get so frustrated about is like, well, is it about class or is it about race? And every time I talk about the racial wealth gap, someone always asks, well, is it a class thing, this class race thing? And you never hear that when you talk about, like, gender, the gender wage up. The people aren't. Well, isn't this a class thing? Well, sure, but, like, I can walk and chew gum at the same time.

[Anna Shymansky]

Right?

[Mehrsa Baradaran]

Like, it can be race and it can be class. It certainly is race and it certainly is class. And those things intersect in weird ways where you have class being used in racist ways. And this is the Trump phenomenon, this is the progressive, the New Deal phenomenon of we will give white workers in the south white supremacy to get them on board for this plan. And so we have to uncouple those in a way. And I don't have the solutions. I just want to point out that it's a problem to put those things against each other.

[Emily Peck]

And the racial wealth gap does. Doesn't care about class. Like, if you look at the data, even for professionals, people with agrees, it's still like, this massive gap. That huge gap is getting bigger.

[Mehrsa Baradaran]

Is getting bigger. Yes.

[Felix Salmon]

So let's talk about the thing which is in the news right now, which is the official thing, which exists in public policy today, which is trying to bring capital into struggling communities of mostly, you know, black and brown people, which is our favorite new thing called opportunity zones. Apparently, Long Island City is an opportunity zone. We might talk about that a bit later, but meh. So what is an opportunity zone? And, like, is. Is this something that you're seeing people actually get excited about, or is this just something that Anthony Scaramucci thinks he.

[Mehrsa Baradaran]

Can make lots of money, unfortunately. And this is where my work comes in. And the reason why it's a little bit complicated is I am totally opposed to this idea of policy. And here's why. You have these black segregated spaces that are created by violence and racial covenants and the fha, right? So you've redlined people into this area, and we call it a ghetto because it is not, you know, it's not a black community. They didn't choose to live in, you know, Harlem and South Chicago or Baltimore. That was the only place that they were able to live because the other places weren't open to them. So we have these things, things called ghettos. And all of a sudden. And this is where Nixon comes in, right? Nixon is able to use. And so the black. So there's two ways of responding to the ghetto. One, as James Baldwin says, is the only way to deal with the ghetto is the only way to improve the ghetto is to improve it out of existence. Right. So integration. So this is the George Romney mlk. So there's one way to get rid of the ghetto.

[Felix Salmon]

So James Baldwin is a gentrifier.

[Mehrsa Baradaran]

Well, kind of. I mean he's, he's just such a creative thinker. I think he could come up with arguments for both. So, so there's that way and then the other. Not a gentrifier. I want to say an integrationist and that's an old word and it's got some baggage now, but basically like let people live where they want, but push them out. So this is a George Romney, like we're going to create public housing in white suburbs and he gets like, you know, a white riot after he suggests it. So there's integration and then there's reparations. So this is what the black nationalists were saying, okay, if we're going to have a black ghetto, we want sovereignty. So we see this as a colony. And what colonies do against the colonists is say we want not just, you know, black businesses, but we want control of our school boards, of our hospitals, of our police, all of that stuff. So these were the two options. And so what Nixon says is, okay, I'll take your black power movement and I'll give you black capitalism. So he starts calling the ghetto. He doesn't do it because he's not quite sophisticated enough, but he calls it like opportunities and capital. And then you get Reagan calling it empowerment zones and then you get Clinton calling it like, you know, niche capitalism. So Larry Summers says, you know, black businesses are like market capitalists coming in and finding profits and entrepreneurs where nobody else. It's like this neoliberal, like we were not going to give you capital, we're going to send you entrepreneurs and disrupt the ghetto. Right. And so now you've got this. So this opportunity zones is not new. It is so Nixonian, it is so Clintonian and Reagan and all of this stuff. It is basically the market's response to the ghetto.

[Felix Salmon]

But it's more, it's not just the markets, it's also legislators. Right. So just to be clear, what we're talking about here is that if you have a bunch of investments in Amazon or some high flying stock and you bought it very low, and if you sell it, you have to pay lots of capital gains tax and it's a good capitalist. You don't want to pay capital gains tax, then the government will come along and say, hey, we have a way to mean. Which will stop you from having to pay the capital gains. Just take all of the money you get from selling your Amazon stock and put it into one of these opportunity zones, and then your sale is tax free and you can keep all of your money. And now what you are doing, or, you know, with, with asterisks and. And you can then invest it in these zones, which no one entirely knows what that means. But the idea, I guess, is that it's affordable housing and generally trying to make these parts of America which are poorer than their neighbors richer again.

[Emily Peck]

And this is part of the Trump tax bill.

[Anna Shymansky]

Well, just to be clear, this is actually based on an act that was put forward before the actual tax bill. It was supported by Cory Booker. It was supported. It's a very bipartisan bill, just to be clear. And then it was attached to the tax cuts. And I will say, if you look at a lot of the literature that's coming out around this, they're very well aware of all of the failings of previous attempts to do this kind of thing. They explicitly say, like, there's been a lot of mixed results and a lot of not great results. But what they have seen where there were certain types of programs and certain credits that actually seem to work somewhat to increase employment. So their idea was, well, let's see what actually worked. Let's try to create a program that replicates that, but on a bigger scale and not simply focused on real estate, which was one of the problems in the past. So I agree that I think historically a lot of the kind of opportunity zone, all of that has not been overly successful. There have been some successes. And I think it's reasonable to say, well, this is a way to encourage more investment in these areas. Because if you look at some of the previous tax credits, it was something like you have the Urban Institute saying, you know, two thirds of this investment would not have happened without these credits.

[Felix Salmon]

So the first is the question, why isn't there exactly. Is there real evidence? And this is why I'm really asking you. Mesa, is like, you've been talking to a bunch of policy wonks about this, and some of them are very enthusiastic about it and some of them aren't. But do you think that if you have an area which is largely black and brown people, that dropping a bunch of money from helicopters onto that area is going to actually help?

[Mehrsa Baradaran]

Well, it's not money for them. So this is the thing. You get the investor. So it's like I used the analogy before. It's like having cancer and someone giving you a free car. Like, that's awesome. You are a net benefit beneficiary. If you get that car, that's really great and you're going to use it and it's going to help you out in your life. So, yes, if we're measuring opportunity zones as increased employment and investments and money, great. If we're measuring. What I'm trying to measure is community wealth building. This is not the answer to this. Right. So you can call it what it is. And there is some utility here to get more investors and more employment, but it is not wealth creating because those people in that community are not the investors. The investors are always going to be the people with capital who are like.

[Felix Salmon]

People at Anthony Scaramucci. They're, they're white people, the tech guys.

[Mehrsa Baradaran]

I mean, this was a bipartisan thing, but it was also pushed by a lot of the tech people who wanted to diversify their asset portfolio. So this has been a long time coming. And there has been other plans by Cory Booker and Cleaver, Representative Cleaver and others who have been pushing opportunity zones, but it finally got passed because of this sort of consortium of tech people. So they're, they're looking at opportunity zones like, like, you know, the Mission District of San Francisco, Salt Lake is an opportunity zone, as you pointed out in this article and a couple other, like, I mean, Atlanta, the opportunity zones are not. But even if they were, right? So even if you're talking about a totally distressed area, what this says is if you're a big company and you want to invest in this area, you get a tax credit. Okay, so what does investment look like? Let's say like the best case scenario is you totally disrupt. You change this area from distressed to a new hub of, let's say, Delta. Okay, what happens to the people on the ground? They were tenants to begin with. They weren't homeowners. So they're not getting the upswing in property values. Maybe you get other small business, maybe they're getting employed, but in 10 years, they're not living there anymore. If you have revitalized the area with outside investments, that area looks like Harlem does now. The people who are tenants can no longer afford it. They're being pushed out.

[Felix Salmon]

Right.

[Mehrsa Baradaran]

So unless you're giving people a stake in the land and allowing them to have the equity of the upswing, I don't see how this helps fix the racial wealth gap.

[Emily Peck]

Like the opportunity is for the investors, not for the actual people who need help.

[Anna Shymansky]

Yes, well, but I also think just that when this was being put forward, it was not being put forward necessarily. As the idea is, this is going to solve the racial wealth gap. It was going. It was the idea that like we do have a lot of localized poverty and this is one way to get people to put money in for a long term investment. And it wasn't. And, and now look, you have a lot of people who supported this that do support other things like potentially baby bonds and these other, other ideas. I think the idea that putting money into a community will necessarily mean that the people who are currently living there will only be worse off.

[Mehrsa Baradaran]

I don't know.

[Felix Salmon]

We're not saying worse off.

[Mehrsa Baradaran]

If he gets a car, you get the car, right?

[Felix Salmon]

You get the car.

[Anna Shymansky]

But they won't necessarily leave.

[Felix Salmon]

Yeah. So this is where we need to segue into Amazon. Dun, dun, dun. We were very careful to not talk about Amazon last week because we knew that you were coming on this show. And so now we get to talk about the fiasco that was Amazon's HQ2 in New York City. And only in New York. It doesn't seem to have become a fiasco in Nashville or in Crystal City, but in New York it was a big focus of protests and local politicians started coming out against it. And eventually Amazon threw its toys out of the pram and decided they were picking up their toys and going home and they left. And one or two tears were shared by like Lloyd Blankfein. And then, and what was fascinating to me about this entire story was that it was all based around this opportunity zone of Long Island City, which how it got, you know, there's obviously a huge amount of sort of political maneuvering in terms of trying to get these places deemed to be opportunity zones. Even if, if Amazon had done no negotiating whatsoever with New York State or New York City, they could have just come in to Long Island City and built their headquarters as of right. Got most of the tax break. Not all of them, but most of the tax breaks they were going to get, they could have got as of right, they could have built it. And then everyone would kind of look across the east river from Manhattan one day and they'd notice Amazon there and they go, oh, I guess there's another big corporation come to New York, only this time it's in Queensland. And that's not what happened. But I feel like if you're protesting Amazon coming into Queens, you're really protesting the existence of all of these incentives which exist whether or not you have the negotiations.

[Emily Peck]

I mean, it does seem that Amazon really cocked this up. I mean, from the start, making it into a beauty contest for all these municipalities across the country. Why draw attention to, like, the biggest company in the world going after, like, tax breaks all, you know, from, from poor areas. And then, like, not a good look.

[Felix Salmon]

And then requesting the helicopter landing.

[Anna Shymansky]

Yeah.

[Emily Peck]

And requesting the helipad. And then coming into New York City and thinking it was going to be easy, which is ridiculous. And then acting kind of like, I mean, maybe it was a good thing that they walked away. I kind of think in the end, probably it's smart that they walked away. But not thinking that they were going to have to negotiate with activists and protesters here was also really. Yeah, it's, like, dumb.

[Mehrsa Baradaran]

I want to know who came up with a strategy.

[Felix Salmon]

Messy city. And if you come into New York and expect 100% to be greeted as liberators or whatever.

[Mehrsa Baradaran]

And it's a free rider problem too. Right. Amazon wants to come to New York because New York has great public infrastructure that has been paid for by the taxpayers and for a long time. Right. I mean, yeah, Robert Moses kind of screwed that up a bit. But. But Long island has, you know, the public infrastructure has educated their workers that we have built roads and subways and buses where a lot of the country hasn't had that investment in public infrastructure. And they're like, we will ride upon your public infrastructure and pay no money to build it in the future. And so this is the, the problem of, like, putting up, you know, letting these, like, like you said, a beauty contest or like this, you know, relying on Amazon to be this, like, fairy godmother of jobs where use public resources and tax Amazon and create the jobs ourselves. Right. I mean, there's no reason Amazon should get a tax break. Right. And there's no reason at all.

[Felix Salmon]

And one, go wherever you want.

[Anna Shymansky]

But like every. As you said, though, any company who would have come there would have gotten a tax break. And that's the problem.

[Felix Salmon]

Yes.

[Anna Shymansky]

And that's. And if you believe that, that's fine. I guess I would just say that Amazon was gonna bring in a lot more tax revenue than they were gonna get. The city and the state were going to be better off. They were going to create, and they were only going to get the tax breaks if they actually created the jobs that they said that they were going to create. These were good jobs. And so they were good jobs for.

[Felix Salmon]

Like, well, Educated, Yes.

[Anna Shymansky]

Which are the kind of jobs we, a lot of that we need in the city.

[Felix Salmon]

We have plenty of those jobs. No, actually 3% unemployment rate. If you are a well educated computer engineer, it is not hard for you to find work in New York City.

[Anna Shymansky]

Part of the problem if you look at New York City moving forward is that we currently have the financial industry which is shrinking. We have media, which is not doing particularly well. We have maybe fashion, which are also not doing particularly well. New York City is looking to the future and saying where is the growth coming? And you have a lot of people in the state and the city saying we need to start investing in trying to get like new economy companies to come. Now does this mean that no other company is ever going to come to New York? No, of course it doesn't. But I know this is not going to be popular belief, but I think that this is not a good thing for New York. I think it shows that frankly New York needed Amazon more than Amazon needed New York.

[Mehrsa Baradaran]

I think that's, I mean I disagree because the data doesn't back that up. And one is because I think you have, looking at who can afford to live and work in New York. It is not the hundred thousand dollar jobs. I mean maybe Long Island City is a different thing. But you have, you have New York and San Francisco that are super cities right now. They are getting, I mean they are these hubs of every. Everyone wants to go to New York or San Francisco and a few other Atlanta, maybe the greater Atlanta region. But you have all these other cities that are just devastating, devastated, dying, right in spirals, downwards.

[Anna Shymansky]

Right.

[Mehrsa Baradaran]

And so you have New York and San Francisco actually have created an ecosystem of jobs and equity and worth that. I mean, I think if New York City's worried, then the rest of us are.

[Felix Salmon]

Exactly. And I think the way that you measure this is in property values, you know, like in many ways if you look at the difference, if you look at the value of land, like if you look at the difference between how much it costs to buy an apartment in New York versus is how much it would cost to build that apartment, you know, that's like, that's the rents that are being extracted by the owners of the land. And the fact is that the land in New York is the most valuable land in America precisely because everyone wants to be here. Everyone wants to be able to. It's competing to pay a premium to live here because as Richard Florida puts it, the world is spiky and the new New York is like the spikiest of the spikes. And you know, are you right, Anna, that like, there is a, you know, a possible world in the future where New York becomes less rich? You know, in a way we can, we can but hope, you know, because. Because if, if America becomes a little bit more evenly distributed, that would probably be a good thing.

[Emily Peck]

I think one good thing this has done is sort of drawn attention to these subsidies that different cities and municipalities, you know, give out and sort of painted them in a bad light. Because one thing that would be good is if everyone stopped doing this kind of thing. Like we saw what happened with Foxconn, right, in Wisconsin, where they promised it was a fiasco and one benefit would be to stop treating these. Stop kissing ass. Stop kissing corporate ass all the time.

[Felix Salmon]

Exactly.

[Mehrsa Baradaran]

It's a race to the bottom.

[Felix Salmon]

You can't have cities and states competing with each other to see who can offer the greatest tax breaks to corporations, because that just results in corporations paying no taxes. Taxes as we just saw with Amazon, who for the second year running, you know, if you look at their 10Ks, if you look at their annual reports, it looks as though they're basically not paying any taxes. Now this is not the same as their tax filings. Their tax filings are confidential. We don't know what their corporate income taxes are, but they're not high if they're even positive.

[Mehrsa Baradaran]

And I mean, the more jobs you get in a place, the more jobs are created. So you're right that like putting a net infusion of 25,000 or 50,000 jobs creates more jobs, right? So you have Amazon workers, but you need nail salons and yoga studios and all of that stuff. It's just that New York can't bear to pay those low service workers that much money. So there's this, there's this great book called the New Geography of Jobs. And they kind of map out like of Apple's, whatever, 10,000, 12,000 workers, they've created 60,000 other service sector jobs. The question is, where do you house those people? Where do you house a nail salon person? And in San Francisco and New York, the poor, you know, and the nail salon workers are now being pushed further and further out into the city. And that's fine, right? So New York and San Francisco have these ecosystems of jobs, creating more jobs, but then you have the rest of the country. That I tend to worry about too is like you have these areas where no one is coming, right? So if Amazon wanted to do a public service, they could move to Detroit, you know, or to Baltimore or to Ohio, where they could attract workers and create jobs there. They could revitalize in one fell swoop, or we could do public programs. Right? So I've suggested a few, like, you know, taking a city as an ecosystem and adding some infusions of, you know, Fed financing, whatever, to, to bring in a bunch of people and revitalize the city. You just need. It's like a. A complex network of a bunch of different things that go into it. You can't do it with one company, but you could do it with three different things and then wait.

[Felix Salmon]

And actually, it does happen. Like, my. My favorite example of this happening is Frisco, Texas. Yeah. And that was just a dusty bunch of farms. It's just north of Dallas. There was nothing there 20 years ago. It is now home to like 20 Fortune 500 headquarters. It is growing incredibly fast. They're building a new high school every six months. It's got an incredibly good school system. It's got an incredibly, like, high standard of living. Everyone loves it. It's possible to build these things ex nihilo, just literally out of nothing. What Amazon did, when it announced its HQ2 beauty contest was basically saying, we are so big and our headquarters has the potential to be so big that we can change the facts on the ground and we can create a whole new area that does exactly what Mercer is talking about and creates a whole bunch of ancillary jobs. And that's why a whole bunch of cities and states got excited about the idea. And then after looking at all of the proposals and getting bribed billions of dollars by various different municipalities, Amazon says, actually, you know what, we're just going to go to the rich places where we don't need to change the facts on the ground, because the facts on the ground are actually the best in America. And that was just ridiculous.

[Mehrsa Baradaran]

And this is Seattle, too. I mean, Seattle. So Microsoft and Starbucks, before they got in there, Seattle was a crazy bad city, right? It was on this downward spiral. And, you know, Bill Gates wants to go back home and he was in Albuquerque, moves up to Seattle and then you have Starbucks. And now look at Seattle. I mean, Seattle overnight went from being a downward city into an upward one. So how do you do that? I have a plan right now with Roosevelt on. It's not out yet, but the Homestead act, right? It's 21st century homestead act. Don't laugh. I have proposed postal banking, too. I'm like one of these people that gets old things from the dustbin and puts them out. So the Homestead act is, you Know, you take Detroit, Baltimore, Ohio, whatever city is declining. There's a lot of abandoned homes in these areas. So 60% of the homes are abandoned, they're foreclosed on, usually owned by the city using Fed financing and have some complicated but really like not tax cuts. You buy up this land, you hand it over to residents with certain qualifications. So under 50,000 or whatever, give them the financing with, you know, whatever, FHA sort of finance, low interest loan and then have a public works program or two. Right. So in Savannah, Georgia, we had a port. The gov. The city, just the state of Georgia created a public port and it's one of the most profitable public port. So some sort of public project, you're going to, you know, maybe do broadband, whatever, and to sort of revitalize it using public financing. I mean, that doesn't have to be what we do, but there are creative public ways. Instead of waiting for Amazon and giving away essentially what we would use in public spending on tax credits, we could actually spend that and create the upward benefits. I mean, that was the heart of the New Deal, right? Public works projects that were the mixed economy.

[Anna Shymansky]

Right. Public works projects weren't actually. What were the most successful parts of the New Deal? I mean, I think the most successful parts of the New Deal were the establishing of certain regulations and also establishing certain policies that later on. Whereas, I mean, the New Deal was the actual. A lot of the programs did very little to spur development and employment.

[Mehrsa Baradaran]

It wasn't until the war, fha, the gi.

[Anna Shymansky]

Oh, I agree. I mean, I agree. That's why I said the things that later on did have a benefit. But I'm just saying, I think the history of extremely successful public works is mixed.

[Mehrsa Baradaran]

Yeah. Yes.

[Emily Peck]

It's just so interesting.

[Mehrsa Baradaran]

You can do it wrong.

[Emily Peck]

Like we're willing. New York's willing to give Amazon 3 billion in tax breaks. But if we say, what about reparations? People are like, we don't give away money.

[Mehrsa Baradaran]

Yeah, we don't do that. We don't ask, Right. We only ask, how are you going to pay for it? When it's like a social benefit, we don't ask how are you going to pay for it when it's this massive tax cut or I mean, not to mention military spending, we never ask, how are we going to pay for a war? You know, we ask, how are we gonna pay for reparations? The same way we pay for the war.

[Felix Salmon]

On which note, let's have a numbers round. Anna Shymansky, you can go first.

[Anna Shymansky]

My number is 295 pounds. Okay, so this was the cost of the Brexit box for Brexit stockpiling made easier. It apparently has freeze dried food that lasts 30 days, water filters and a fire starting gel.

[Mehrsa Baradaran]

Oh my God.

[Anna Shymansky]

This is, this is a real thing.

[Felix Salmon]

Stock up on canned goods and £295 Brexit box. What's that, like 350 bucks? Yeah, or it will be about 20 bucks after Brexit goes horribly wrong. Mersa, did you bring a number?

[Mehrsa Baradaran]

Yes, 22. So it's not a funny number. Sorry. It's a sad one. White families have 22 times the wealth of black families.

[Emily Peck]

Okay. My number is $1.2 million. That is the income of an unnamed investor who is in the great piece in the New York Times that just came out about how high income earner elite professionals are very, very unhappy. And the man who earns the $1.2 million says he's just so unhappy, hates his life. He contemplated taking a job that paid half as much and his wife laughed at him.

[Felix Salmon]

Only 600,000.

[Emily Peck]

Only $600,000. His wife was like, we can't afford that. It's a nice little piece.

[Mehrsa Baradaran]

Yeah.

[Felix Salmon]

My number is 55, which is this little project that I just came out with on Axios. I've decided that we have talked too much about unicorns and so now we need to talk about Minotaurs. So unicorns are companies which are private VC backed companies which are valued at a billion dollars. Minotaurs are private VC backed companies that have raised a billion dollars in equity capital. So not like they would be worth a billion dollars even if all they did was take the money that people had invested and they just put it in the bank in a checking account paying 0%. We did a little, we tallied this up. We found 55 minotaurs. These are companies which have raised over a billion dollars. Which just to put that in perspective, when Eileen Lee, this venture capitalist, coined the term unicorns, there were 39 unicorns. So there are now more minotaurs today than there were unicorns just before.

[Emily Peck]

And that was just like 10 years ago she coined it.

[Felix Salmon]

It.

[Mehrsa Baradaran]

So just to bring it back around a third of black families have zero to negative wealth. Just to, to.

[Felix Salmon]

You mean they're not raising a billion dollars. But like, I mean it's amazing.

[Mehrsa Baradaran]

Maybe the minotaurs invest in opportunity zones and trickle down some of that money.

[Felix Salmon]

You should, you should read the, the Gideon Lewis Kraus piece in the New York Times Magazine about wework and talking about how like they've raised. I think they're up. They're like 8.7 billion or something in equity capital that they've raised to invest in what is, according to Gideon, is basically a way of trying to hold at bay the existential angst of modernity or something.

[Mehrsa Baradaran]

I mean, the thing that makes me a little bit happy about the Minotaurs and the unicorns and the owners thereof are that they're building these bunkers of survivalist bunkers in New Zealand and these other places. They're terrified of the class revolution that they're, you know, and, and other just like basically the results of their, you know, greediness. They're actually, I don't think they sleep well at night. And so they have these bunkers, which makes me a little bit happy to think that it's not just pure, like there's some existential fear in there of what they're doing.

[Felix Salmon]

I did get one response on Twitter from someone saying, oh, I know why you called it a minotaur. It's because the minotaur required an annual human sacrifice.

[Mehrsa Baradaran]

Literally blood.

[Felix Salmon]

Exactly. So on which sanguine note, we will wrap up this edition of Slate Money. Thank you so much, Mercer, for coming all the way in from. Where did you come in? We already took. Because you're coming in all the way in from Midtown.

[Mehrsa Baradaran]

Thank you so much.

[Felix Salmon]

And so, yeah, many thanks to Mercer for coming in. Many thanks to Max Jacobs for producing. Many thanks to every everyone out there for listening and for sending emails to slate money.com and we will talk to you next week on Slate Money.