The ghost of Gautreaux.

THE housing policy of a free society ought to be simple: people should be able to live where they want, using their own money and engaging in voluntary market exchanges.

Traditionally, this led to neighborhoods centered on one group or another, whether WASP, Greek, Ukrainian, Italian, black, Chinese, or whatever. This natural pattern, a product of rational choice, makes possible strong communities, centered on extended families as well as churches, schools, and civic organizations.

But the Clinton Administration objects. It wants to place Americans where it wants them to live, at heavy expense to the taxpayer. HUD Secretary Henry Cisneros has promised to end "spatial segregation," which he attributes to racism. Cisneros plans to stir the demographic pot, picking six major cities for a HUD experiment called "Moving to Opportunity." At taxpayer expense, inner-city residents on welfare, guided by non-profit groups under contract to HUD, will be transferred to the suburbs. The government will pay for their move, rent, and electricity, and provide counseling and day care. As a test, it will shift 6,200 households in the next two years at a cost of $234 million.

The idea is to free blacks from the depressing congeries of inner-city troubles.

Reviving Gautreaux

MOVING to Opportunity is based on the Gautreaux Program, Chicago's forced residential integration of the late 1960s and 1970s. For liberals, Gautreaux represented a landmark step toward the government-run ideal.

The 1960s lawsuit that made Gautreaux possible was born of political resentment. Beginning in 1956, and continuing for nearly two decades, Chicago's Mayor Richard Daley enjoyed popular support from the city's wide variety of ethnic groups, including blacks, and he kept crime and taxes low and provided efficient city services. His Cook County Democratic machine also enjoyed a measure of public support--not least because it successfully resisted federal pressure to "integrate" Chicago's settled ethnic and racial communities.

Daley's resistance in a time of rampant social engineering seems like a miracle, but it was a matter of practicality. The machine could usually deliver Illinois's electoral votes to the national Democratic Party. As part of the quid for this quo, the machine had an unusual amount of discretion in the distribution of federal housing money.

However, the machine made a mistake in 1956, at the very outset of Daley's first term as mayor, that would eventually undermine this resistance. The machine's mistake was to maneuver events so that one Richard Austin wound up as the Republican candidate for governor. Unknown to Austin, the machine had no intention of making him governor; it merely needed a respectable opponent to run against the future Democratic governor, as later depositions confirmed. When he lost, the machine awarded Austin a federal judgeship.

Austin was not consoled, however. He believed he should have won because Eisenhower carried even Cook County against the hapless Stevenson. Austin never forgave Daley, and as the judge in the Gautreaux case ten years later, he struck back.

The plaintiffs' lawyer was Alexander Polikoff, a longtime fixture at the ACLU. Perturbed at Daley's refusal to obey federal housing policy, Polikoff decided in 1965 to take the city to court. His first step was to find a client. After a long search, he came up with Dorothy Gautreaux, a married mother who wanted public housing in a white area. In 1953, she had requested an apartment in Dearborn Homes, but got one instead in AltgeldMurray Homes on the far South Side--scarcely, one would have thought, a serious human-rights violation. Nonetheless, Polikoff alleged that his plaintiffs (there were other families as well, all on welfare) had been harmed by Chicago's "racist" housing policy.

What Harm?

FIRST the matter of legal standing had to be dealt with. Did Polikoffs clients gain the right to sue the taxpayers of Chicago solely because they didn't live in a white area? The 1964 Civil Rights Act, the basis of the suit, had been widely understood as forbidding only explicit, racially motivated harm- e.g. the refusal to consider the bid of a qualified buyer, solely on grounds of race.

But, according to Polikoff, it was enough that the "present" circumstances denied his clients "a right to live in a public housing system which is not infected and shaped by a policy of racial discrimination in the location of its facilities." Translation: the mere existence of racial disparities, regardless of economics, was enough. That is now a familiar leap of logic, though at the time it was novel. Austin, pursuing his vendetta, accepted it.

Austin cited a letter from Howard Glickstein, staff director of the U.S. Civil Rights Commission, who argued against a narrow interpretation of the 1964 Act. "It is our experience that the most effective way to ensure goals of equal protection is to define the results that must be achieved," he wrote (emphasis in the original). It may have been the earliest official statement of this federal policy.

The Chicago Housing Authority made a series of impressive legal arguments in its defense, but its commonsense argument was the best: public housing should not be forced on a resisting community. The judge laughed that out of court, and ruled in favor of Gautreaux and company. He ordered that no new public housing be built in areas more than 30 per cent black until 1,450 units had been installed in white neighborhoods.

In 1969, when the court order was announced, race relations were not exactly at an all-time high. Civil-rights marches through the West Side had led to riots, and gang activity was on the rise. Daley went to war against Austin's order--with the support of blacks who wanted more public housing and whites angry that the neighborhoods they worked hard to afford were now to be occupied by people on welfare.

In an ironic twist, HUD had just earmarked $26 million in Model Cities money for Chicago. Daley cheered HUD for rescuing the city from Austin, while the judge opposed HUD on grounds that the money violated his order. After a protracted battle, the judge partially relented.

In his new ruling, he claimed sarcastically that "It is an anomaly that this 'law and order' chief executive of this city should challenge and defy federal law," i.e., Austin's own ruling. "Apparently 'law and order' applies only to the enforcement of state law and municipal ordinances." Austin gave "the chief executive and his City Council an opportunity to repent and reconsider their conduct" by reducing from 1,450 to 700 the number of units to be built in white areas before the city could get the Model Cities money.

The final chapter was the 1976 Supreme Court decision Hills v. Gautreaux, which granted what Polikoff had long sought: forced integration, funded by the public, and administered by Washington at the behest of local leftists.

The Polikoff plan was called the "Gautreaux Demonstration Program," and, using HUD Section 8 certificates, it moved several thousand inner-city residents to the suburbs over the objections of virtually every group in Chicago, including black community leaders.

The main result of the program was "white flight." By the end of the 1970s, more than 700,000 whites had moved out of Chicago. Yet Elizabeth Warren's highly regarded study on Gautreaux declares the policy a complete success. Of the resulting turmoil, she says, "one cannot help but be distressed to see such a result from such a sincere effort to promote racial justice."

Racial Micromanagement

IN HOUSING literature, social engineering is not a metaphor but a policy. Academics use the "Index of Dissimilarity," which compares racial concentration in particular Census tracts to that of the entire city. The Index rates a community against an unachievable standard of perfect blending, in much the way that economists use "perfect competition" as an other-worldly policy benchmark for anti-trust and other policies. Most cities rate about 80, on a scale where 100 is total separation.

Even moving blacks to the suburbs does not automatically increase "integration." As Professors Elizabeth Hurtman and Terry Jones note in a 1991 essay: "It is a discouraging development for fair-housing activists who have worked hard to open up the suburbs and find their effort futile as the suburbs become increasingly black." Apart from white flight, there is the fact, as the authors note, that when blacks move into suburban neighborhoods, they tend to seek out areas with other blacks.

The halfway house to residential central planning is "integration maintenance" (IM). It uses preferential treatment to bring about and preserve integration. For example, whites will be favored if they choose to move into a black area, while blacks wanting to move to the same area will not. Starrett City in Brooklyn adopted this policy until blacks sued over loan preferences for whites.

IM policies already tried include forbidding whites to sell early in the integration process, before property values fall. Other policies being proposed include requiring advance notification of the intent to sell, banning real-estate solicitations, and even outlawing "For Sale" and "Sold" signs.

In a typical case of policy backfire, IM policies actually increase the likelihood of whites leaving. If whites believe that blacks moving in are doing so because of economic advancement, acquiring mortgages and homes through their own achievement, the whites are more likely to stay. But if members of the underclass, with attitudes and behaviors unchanged, are enabled to live in a suburb through social engineering, then whites will flee.

Rethinking Priorities

THE academic journals never raise the question, but why should perfect integration be a policy ideal? Free-market economists have emphasized that the market brings people together, forming communities of commerce among differing groups. But it is equally true that markets mean choice, and with choice comes sorting. People tend to choose to work, socialize, and live with others in their own social, religious, cultural, and economic group. There's nothing wrong with that. In fact, it creates real diversity among neighborhoods.

The tendency of people to sort themselves is well known to demographers, and the literature is filled with fretting over this natural system. Sociologist Clyde O. McDaniel, for example, defines segregation as "de jure and de facto separation of people's living quarters by some demographic feature like race." But shouldn't the term segregation be limited to state-enforced policy, and not used to describe the results of human choice?

Wherever there was once de jure segregation--and its importance in housing has been hysterically exaggerated-it is long gone. Since a Supreme Court decision in 1917, people have legally been able to live where they wanted to, and that choice has been largely determined by economic considerations.

A good example is Houston, which has had no zoning for more than a hundred years, and no state-enforced housing segregation. Yet most blacks live, as they have always done, in a few neighborhoods that are on average 90 per cent black. Even after many attempts to reduce residential separation (by the Justice Department, HUD, the city council, and the courts) the Dissimilarity Index for Houston is still 81 per cent. It will probably always be so, absent a totalitarian version of integration maintenance.

Government cannot know the proper level of racial togetherness any more than it can know how to organize industry. Both must be determined by the market, the only rational means of social and economic cooperation. The free choices of free people may result in groupings the central government doesn't like, but a society that values liberty will hold fast to the principle of voluntary association.