Here's an example of institutional racism that some conservatives may be able to understand-redlining. Redlining is "a discriminatory practice by which banks, insurance companies, etc., refuse or limit loans, mortgages, insurance, etc., within specific geographic areas, especially inner-city neighborhoods." (Dictionary.com)
Redlining advocates justified the practice with statistics that show that a designated "bad" neighborhood has more crime and/or loan defaults. However, if you look into the process more closely you can find hidden assumptions and institutionalized racism.
Assuming our "bad" neighborhood is largely African American, it is that race which will suffer from the practice of redlining. To get the big picture you need to consider why African Americans happen to live in "bad" neighborhoods. There are several potential reasons. A big one is how the boundry lines are drawn when evaluating the different neighborhoods. There may be a poor white neighborhood that has as much crime and as many loan defaults as the African American neighborhood, but that fact gets statistically diluted because it is within the same boundaries as another, larger neighberhood with different characteristics. That statistical dilution may, or may not, be intentional. But it should be noted that statistical dilution is the tool used for successful jerrymandering. (which has been used for racist purposes many times)
Another reason is that the more prosperous African Americans who would ordinarily choose to live in a better neighborhood were prohibited from doing so by discriminatory real estate practices in the not-too-distant past. In addition, employment and wage discrimination in the recent past against African Americans made it more difficult for them to afford a home compared to an equivalent white person. The lower quality schools in the African-American neighborhoods (largely due to less funding from property taxes compared to more prosperous areas) insured that another generation would have fewer opportunities to afford living in a more desirable neighborhood. African Americans were economically restricted to poorer neighborhoods compared to equally educated, skilled and hard working whites by historic discrimination and the resulting economic damage. You don't have to accept that there is ongoing racial disrimination to see that discrimination in the past, and other factors, can still put many African Americans well qualified for a loan in neighborhoods that are considered bad when redlining is used.
Redlining is unfair, but it is also an overbroad, inaccurate method for evaluating potential borrowers. Judging potential buyers based on their individual credit, employment and criminal history is much more accurate than deciding based on their neighborhood alone. Qualifying borrowers based on neighborhood is especially inaccurate when considering residents of an African American Neighborhood that is still impacted by past racism. It may cost more to initially implement evaluation of individuals rather than neighborhoods, but doing so brings in many more qualified customers and more effectively weeds out unqualified customers.
