The Economics and Ethics of Mixed Communities: Exploring the Philosophy of Integration Through the Lens of the Subprime Financial Crisis in the US

Abstract

This article specifically aims to address both the economic and ethical implications of mixed communities in the US through the lens of market failure, and more specifically, the recent subprime financial crisis. Relative to the research of mixed communities and social integration efforts, I first intend to explore income mix as an explanatory variable of census tract level foreclosure rates in the state of Ohio, USA. I aim to show that counter-homogenous income communities display a greater capacity to absorb the adverse affects of the recent subprime financial crisis than concentrated communities of poverty. Second, I intend to provide an ethical appraisal of foreclosure effect on vulnerable communities using John Rawls’ “Veil of Ignorance” as an ethical framework by which to evaluate the “fairness” of social segregation. Ethically speaking, a Rawlsian critique exposes the sub-optimality of concentrated pockets of neighborhood deprivation, where the uneven affects of subprime foreclosures are not only disproportionately shouldered by lower-income communities, but also found to be unjust. This study is not intended to suggest the unqualified support of existing US dispersal efforts, but it does contribute to exposing the sub-optimality and injustices of inert, segregated communities.