Editor’s Note: When economic correspondent Paul Solman went to Baltimore earlier this month to report on how the riots there affected the local economy, he spoke with Johns Hopkins historian N.D.B. Connolly. Connolly brought Paul to the mall where the riots began and discussed why they broke out there. Economic exploitation, he argues, had a lot to do with it. Watch the conversation here or read the full transcript below. The text of Connolly’s extended conversation with Paul below has been edited and condensed for clarity and length.

Paul Solman: So, what are we doing at this mall?

N.D.B. Connolly: This mall is where the riots began [on April 27]. It’s the Mondawmin Mall, here in Northwest Baltimore. It’s just across from Frederick Douglass High School, and it actually sits in the middle of three big narratives about the city’s history. One is the most recent riot. The second is the story of prices and the everyday life of living in Baltimore and what this mall represents for everyday people trying to shop here. And the third is that this mall actually began as one of the city’s first shopping malls that used to primarily serve white customers. And it suffered white flight, and had to basically repurpose itself to deal with a black clientele. And so the history of segregation, the history of price gouging, and the more recent history of the riot are all built here, around the Mondawmin Mall.

Paul Solman: Price gouging? What do you mean?

N.D.B. Connolly: So at the Mondawmin Shopping Center, the experience of being a customer here is actually a little bit different than it is shopping anywhere else in the region. I actually tried to buy a pair of shoes here about three weeks ago that weren’t being carried at the Towson Mall where I usually shop. And unlike in many shopping malls where you go in, the prices are clearly marked, and you just pay at the register, you actually have to haggle at this mall, like you’re at a street market somewhere in a different country. The prices are all very opaque, and there’s actually a lot of research about what happens when you have confined African-American populations, how they generally end up paying more for less, sometimes 15 percent more. And so, when I came in to buy a pair of shoes, having just come from one mall across town, I had a fundamentally different experience. It was understocked, it was overpriced, and I had to leave without actually buying what I was looking for. And I imagine what that must have been like for people who have to shop here every day, who actually live in the immediate vicinity.

Paul Solman: So you think a major factor in what happened here is the economic exploitation of African Americans?

N.D.B. Connolly: Absolutely. There is exploitation happening on several fronts at once. The first is when you think about the residential life and how the city is carved up into these basic color markets: black communities and white communities. Black communities are really prime for various forms of exploitation. They pay more for rent, they pay more for food, they pay more for consumer goods. There are very clear ways in which vendors and merchants recognize these as new markets. For instance, when Wells Fargo arrived in the late 2000s, peddling subprime mortgages, they targeted black churches. And, these people were basically selling risky loan instruments to African-American communities through these pastors.

“Black communities are really prime for various forms of exploitation. They pay more for rent, they pay more for food, they pay more for consumer goods.”

When you think about the pressures of police brutality, the pressures and difficulties of finding decent food and the day-to-day pressures of being poor, all of this then combusts in moments like the Freddie Gray riots. So we have to find a way of evaluating, probably through a federal investigation, an independent investigation, what the consequences are of being poor in a city like Baltimore.

Paul Solman: But if I’m a business person in the inner city, I have extra costs connected to security, the robbery of my goods… I’m just passing on the costs that I incur by doing business there to the people who live in the area.

N.D.B. Connolly: There’s no argument with that. The landlord’s seeking profit margins, the local employer of the corner store is seeking profit margins, and everyone’s lack of investment in the building, in the streets, in the infrastructure is actually making it harder for anybody to make a profit, right? I mean, one of the things about investment on a citywide scale is as each entrepreneur tries to cut corners to maximize their profit margins, it actually takes these disempowered communities and makes them, in aggregate, a place of profound hardship, right? So it’s not unexpected that business people will try to find ways to make their ends meet from month to month. But it’s also important to recognize that when you have poor communities, and concentrations of poor communities, certain kinds of vendors decide to come in. You have corner stores, for instance, that aren’t going to sell decent food. You have landlords who aren’t going to invest as much in their rental property, which will then cause the housing to deteriorate. Once you have deterioration of land, it creates vacant properties and increases the likelihood of squatting, which then raises the problem of crime, which then needs excessive policing. So all of this ends up working together in concert. Part of what has to happen is encouraging investment in neighborhoods, in the streets, in food resources on a citywide scale, that doesn’t allow concentrated poverty to necessarily mean concentrated hardship.

Paul Solman: But the argument has been that neighborhood pathology to begin with is what begins the downward spiral.

N.D.B. Connolly: That is not true. One, neighborhood pathology ends up being a kind of racialized explanation. So, for instance, kids in college who have sofas on front porches, or who are engaging in excessive drinking I consider to be engaged in a culture of pathology, right? They’re just engaged in adolescent hijinks. Only when you deal with poor populations and black populations do people start to talk about ‘a culture of poverty.’ I think it’s a very facile explanation, in fact, to deeper structural issues about economics and quite frankly, racial discrimination. I mean, one of the things that we have to deal with now, for instance, is how the problem of mass incarceration has made a variety of people of African descent utterly unemployable, because they have felonies on their record. How are they even supposed to come back to neighborhoods, take jobs for these local business people, to then build their homes and their communities up? It becomes impossible.

“Only when you deal with poor populations and black populations do people start to talk about ‘a culture of poverty.'”

Paul Solman: But the response is, they shouldn’t have committed crimes to begin with.

N.D.B. Connolly: Many of the crimes that you see communities of color committing are crimes that are rooted in economics. You have, for instance, the drug economy, that’s there to replace the regular employment economy. There’s another way I think that we have to think about employment, hopefully with the help of the government, through an active jobs program, a new New Deal, in fact, for the inner city.

One of my hopes is that this riot, in conjunction with what happened in Ferguson and New York and elsewhere, will begin to initiate a conversation about a government jobs program that really will address the problems of underemployment in black neighborhoods.

Paul Solman: The experience of the 1960s is that housing values and employment in those very neighborhoods went down after the riots…

N.D.B. Connolly: The irony is, actually, that investment in those neighborhoods went up, but it was a particular kind of investment. If you look at areas like Compton, California, Liberty City in Miami and elsewhere, what you actually see is an influx of white capital investing in slum properties. As housing is turning over, and homeowners are leaving the city, real estate speculators are coming in. They’re carving up houses and turning them into primarily rental communities. One example, for instance, is that 92 percent of the housing being occupied by African Americans in a suburb outside of Miami is owned by whites who live out of the community. And that ownership was a relatively recent investment after the riots, right?

So, part of the point is to think about the kinds of investment that we’re encouraging after these kinds of flareups. Is it necessary to improve the situation in terms of food quality? Absolutely. Is it necessary to get rid of secondhand goods in the stores and have them at least at fair prices? Absolutely. Is it necessary to think about a program that really does encourage people who come out of the criminal justice system to have a viable means to upward mobility? Absolutely. All of this needs to be on the table for a post-Baltimore social policy debate.

Paul Solman: But that’s going to cost taxpayer money, and in the United States in 2015, taxpayers aren’t particularly interested in making those kinds of investments.

N.D.B. Connolly: Historically, that’s actually true. And it’s unfortunate, because one of the reasons we’ve gotten into this mess is we have thought about taxes in terms of the deserving and undeserving poor. The long history of dealing with poverty in America has oftentimes meant that we have a divided debate: we’re willing to accept taxes for military spending, we’re willing to accept taxes for increasing policing, but we’re not willing to accept taxes for antipoverty, particularly antipoverty measures targeting communities of color. At no point in the country’s history have the welfare programs that have been initiated on the federal level, and for that matter, at the state level, really targeted the poorest of the poor. Not public housing in the ’30s, not welfare in the ’60s, and certainly not the new welfare initiatives after the 1990s. We have to really think about the kinds of citizenship we’re willing to invest in, the kind of democracy we’re willing to pay for, and ask our American taxpayers if it’s worth preventing the kinds of social unrest in Baltimore, are you willing to accept a little bit more tax on the front end?

Paul Solman: But taxpayers might be willing to invest if they thought the investment would actually pay off, as opposed to more government spending and no demonstrable results.

N.D.B. Connolly: Well, in part, I think, it’s important to consider who’s paying the taxes already and who isn’t. One of the reasons why I think many homeowners balk at the ideas of raising taxes is that in many cases, they’re paying too many taxes now. You have large employers who are getting tax abatements for the sake of development, but if you restructure the tax code and help the region’s employers actually pay a little bit more of their burden, then maybe you won’t have to kick that expense down to the households themselves. And it’s also important to remember that many of the households of color that are paying property taxes are also bearing an unfair burden. So they’re paying taxes, and they’re also not getting the social welfare benefits that they might need.

Paul Solman: But the companies wouldn’t come to Baltimore, or Maryland, if they didn’t get the tax breaks. They’d go somewhere else.

N.D.B. Connolly: They might. But some industries are easier to move than others. And I think if you recognize that, at the end of the day, what companies really need are human resources in the information economy and institutions like universities become key toward feeding into corporations. And it makes a lot of sense from a civic investment standpoint to encourage the expansion of consumers who can then buy products that corporations sell. It makes investing in communities like Baltimore seem like perfect sense.

“It’s going to be very difficult to encourage new kinds of investment in this community, without a concerted discussion about how to create a much more equitable environment, and real incentives for small business to come back to this part of town.”

Paul Solman: What’s your best guess as to the long-term economic impact of recent events?

N.D.B. Connolly: My sense is that the neighborhoods that have been growing are going to continue to grow, and you’ll see the areas that have been struggling continue to struggle. The area around Mondawmin Mall, for instance, will continue to be depressed. Just to give you an example, one-third of the people who shop at this mall make less than $25,000 dollars a year. And, I think that’s not going to change any time soon.

It’s going to be very difficult to encourage new kinds of investment in this community, without a concerted discussion about how to create a much more equitable environment, and real incentives for small business to come back to this part of town.

Paul Solman: Why do people in neighborhoods destroy their own neighborhood, when it’s obvious that there will be negative economic consequences for them?

N.D.B. Connolly: Well, in many cases, they don’t see them as being entirely their neighborhood, right? A lot of the money comes from the outside.

And in many riot situations, and this goes well back into the 19th century, people will target vendors who are pulling resources out of their perceived kind of community, black or white. So, just to give you one example, the race riot in 1921 in Tulsa, Oklahoma, you see white rioters targeting black businesses to whom they actually owed money in the Jim Crow South. It flips in the 1960s, where you see African Americans targeting many Jewish-owned businesses and then in L.A. in ’92, targeting Korean-owned businesses. So that ends up being part of the overall riot mentality, and many of the attempts to attack property are actually property that is not owned by folks living in those communities.