US investing. Ethical considerations

Hi All,
This post is probably going to antagonise certain members of this board. I dont care this needs to be said so that whether or not people heed it, they at least know.

I dont know if anyone else caught the documentary on SBS on Monday night 6th Feb 2006 on Race in the United States. I’ve known for along time that the US has major problems with Race and Racism. I’ve heard the term ‘institutionalised racism” plenty of times but i’ve never really understood it until that documentary laid it all out to bare. I feel impelled to post the following info.

For this i need to set the historical context.
The years immediately after WWII saw two major developments in property in the US. First was the GI bill which gave returned soldiers access to cheap mortgages, and suburbanisation. In large cities there was a major shortage of housing stock and this lead to a boom in suburban developments. The suburban developments were exclusively for whites. African Americans who wanted to purchase suburban homes were not allowed into most developments. This is a matter of historical record. I’m not making this up. Its all very complicated but it basically came down to this. The FHA gave a risk rating to every neighbourhood in the USA. Neighbourhoods which were “white” got a better risk rating, which meant mortgages were FAR easier to obtain than in riskier neighbourhoods. Big deal you say. Well the problem is that this risk ratings were largely based on racial profiles. And predominantly African American neighbourhoods were higher risks, meaning mortgages for those areas were harder to get and more expensive. This has the obvious economic effect of weakening demand in those neighbourhoods and therefore the capital appreciation was much much less.

Then in 1967 a Bill was passed making discrimination in housing illegial. This had the effect of large numbers of African Americans moving into predominantly ‘white’ neighbourhoods. This led to “white flight” where whites left, prices went down, and left those who moved in with houses which were now valued less than what they had paid for them.

So in summary I’m going to over simplify the situation for illustration puposes.
1947 onwards: White people moved to the cheap new suburbs.
African Americans who wanted to couldn’t.
Suburbs became a perverse white ‘utopia’. The capital valuations have increased steadily since then.
African Americans stayed in the inner city neighbourhoods because the system was stacked against them. The capital appreciations in those areas are far far less than the suburbs.
From 1967 onwards when African Americans could begin to move to suburbs, the suburbs they did move to became less desirable and therefore less valuable and the capital appreciations have been historically far less. The perversity of this situation is sickening.

Why is this relevant to this discussion forum?
Well many Aussies are going over to the US to invest. Some have been investing in the inner city neighbourhoods where the prices are really low. These low prices are strongly correlated to race, and the historical institutionalised rasicm of the United States. When making these kinds of investing decisions, for those of us who do take ethical considerations into account, this is something to consider. Do you want to profit from this kind of historical injustice?

I’m not making any judgements about anybody on this forum. I am sharing my knew found understanding for those fairminded folks who care to considerate it.