Over at Cato Unbound, Jason Kuznicki, prompted by V.C. commenters, takes up Shelley v. Kraemer, the 1948 decision in which the Supreme Court held that it was unconstitutional for state courts to enforce racially restrictive covenants. I respond, concluding that Shelley was probably correct, but that the Court could have articulated a much clearer and sounder rationale for its decision.
One thing I don’t mention over there, but I’ll point out here, was that racially restrictive covenants were an imperfect substitute for the explicit racial zoning the Supreme Court invalidated in Buchanan v. Warley in 1917. The covenants worked in some neighborhoods, but overall they were too difficult and expensive to enforce to prevent an influx of African Americans to American cities. See Michael J. Klarman, From Jim Crow to Civil Rights 262 (2004); William A. Fischel, Why Judicial Reversal of Apartheid Made a Difference, 51 Vand. L. Rev. 977, 981 (1998). In some cities, whites lobbied for a segregation laws precisely because restrictive covenants had proved ineffective in restricting black settlement. So while restrictive covenants mitigated the positive effects of Buchanan for three decades, they did not completely negate them.
UPDATE: Sheldon Richman adds his thoughts.