And for going on two generations now, America’s level of economic disparity has been steadily rising. This ongoing financial crisis may be what finally causes it to crest over.

The precise era that saw a drug-law fueled explosion in our prison population, the early 1970s, are the exact same years that the economic situation of blacks began to starkly worsen and that the gap between rich and poor is wrenched wide open. Beginning in those years and continuing into today, “the economic status of black compared to that of whites has, on average, stagnated or deteriorated.”²⁵

Up until 1973, the precise year the Rockefeller drug laws were passed, the difference between black and white median income had been closing. But then that year it changed course, and in “an ominous bellwether… the gap between black and white incomes started to grow wider again, in both absolute and relative terms.”²⁶

In the nearly forty years since America’s modern drug laws were passed, there has been a massive increase in economic inequality by any measure. In the early 1970’s not only did the income gap between black and white begin to widen again, it also becomes much more top-heavily favored to the very rich – who happen to be almost exclusively white as well.

One way to capture it is by examining what portion of America’s total income the top 1% of earners receive. The share of that top 1% has nearly doubled since 1970, and it’s now the same size as the income earned by everyone in the bottom 40% of earners combined.²⁷

So the very few families who make up the top 1% of all earners have a combined income that matches the incomes of all the families in the bottom 40% of earners.

Looking at economic well-being another way, in terms of financial wealth or “stocks, bonds, real estate, businesses, and other financial instruments,” as of 1998 the top 1% of families controlled nearly half of that pie, with the top 20% controlling fully 93% of it. Meanwhile, the bottom 40% of families actually have negative financial wealth – their debts actually surpass their assets.²⁸

And this cavernous gap has only been widening, between 1998 and 2001 the net worth of families in the top 10% of America jumped 69%, significantly more than any other group.²⁹ In the years leading up to that point, between 1988 and 1999, the difference in net worth between black families and white families grew by $16,000 and the gap in net financial assets grew by $20,000. By 2004 white families had an average net worth of $81,000, and black families an average net worth of just $8,000 – roughly a tenth of the average white family’s.³⁰

With home equity making up 44% of an average American’s family’s net worth and fully 60% among our middle class,³¹ the statistics around homeownernship further delineate the racial schisms of American wealth. Not only do blacks pay higher interest rates, have higher downpayments, have less access to credit, get turned down more frequently for loans no matter what’s controlled for, and pay what amounts to an 18% “segregation tax” because homes in black neighborhoods have much less equity than homes in white neighborhoods³² – but since 1970 black homes have appreciated in value roughly half as much as white homes.³³

Even Eminem seemed to have little sense of the irony that was invoked as his self-consciously white autobiographical film, 8 Mile, highlighted the hopeless plight of Detroit’s urban black community that’s existed for generations. The 8 Mile district was created in 1941, when a six-foot wall was built around a black enclave that was deemed unfit to accept loans from the Federal Housing Administration. This was “part of a system that divided the whole city, in theory by credit-rating, in practice by colour.” And so the segregation that emerged in Detroit “was not accidental, but a direct consequence of government policy.”⁸

This policy of segregated mortgages became known as “red-lining,” and by the 1950s one in five black borrowers was paying interest at over 8%, while it was about impossible to find a white family paying more than 7%.⁹

And yet this economic line extends far past that generation. The fact that blacks are foreclosing at a much higher rate than whites in the current crisis was predestined by the conditions of the loans they received, as banks turn down equally-qualified blacks much more often than whites, and forced blacks to pay higher interest on their loans. Housing values are indelibly color-coded, as the average value of a white house appreciates much quicker than a black house. All of this is snowballing into a collective institutional bias that cost black families at least $82 billion even before this current crisis began.¹⁰

Hotlanta served as a case study for mortgage-based racism, as the Pulitzer-winning series in the Atlanta Journal and Constitution “The Color of Money” so aptly captured.

It showed how blacks were routinely rejected for loans which whites in a comparable economic situation were accepted for. And this phenomenon wasn’t isolated to one city, as a 1991 study showed that out of 6.4 million mortgage applications nationwide, even after income was controlled for – blacks were rejected twice as often as their white counterparts. However that wasn’t the worst of it, in urban centers such as Boston, Philly, Chicago, Minneapolis, blacks were rejected three-times more often than whites.¹¹

Even well-to-do blacks have been unable to escape from this institutional prejudice.

Wealthy black neighborhoods in the DC suburbs have a much tougher time getting loans than low-income white areas, and in Boston blacks living on the exact same street as their white neighbors and earning similar incomes found it much tougher to get a mortgage than their white neighbors. Joe Kennedy summed up the cumulative effect of this racial injustice well, describing “an America where credit is a privilege of race and wealth, not a function of ability to pay back a loan.”¹²