No bank would loan the elder Steele money, so he used bricks, discarded lumber, and cast-off roofing shingles to render the properties rentable. “That’s what we used to call equity,” says Mr. Steele, the son. “The sense of the word I grew up with has no relationship at all to the meaning it has taken on today.”

Mr. Steele, 75, is a longstanding conservative commentator on race in America and a senior fellow at Stanford University’s Hoover Institution. We speak over Zoom a week after President Biden signed an Executive Order on Advancing Racial Equity, intended to address “entrenched disparities in our laws and public policies, and in our public and private institutions.” In his remarks at the signing, Mr. Biden seemed to suggest that his is a project aimed at reshaping American governance. “We need to make the issue of racial equity not just an issue for any one department of government,” the president said. “It has to be the business of the whole of government.”

I can almost hear Mr. Steele growl in his study in Monterey, Calif., as I read these words aloud. “This equity is a term that has no meaning,” he says, “but it’s one that gives blacks power and leverage in American life. We can throw it around at any time, and wherever it lands, it carries this stigma that somebody’s a bigot.” Its message is that there’s “inequality that needs to be addressed, to be paid off. So if you hear me using the word ‘equity,’ I’m shaking you down.”

Equity in this “new sense,” Mr. Steele says, can be understood only as “a strategy.” The president is promising to “fix America morally, and aligning himself with the strategy of black people to gain power by focusing on victimization. He’s saying, ‘America must tackle that problem and create programs that help minorities achieve equity’—whatever that may be.”

The idea of equality has been eclipsed, Mr. Steele says, in part because “it was a little too specific” and bore the baggage of the old civil-rights movement. “We fought for equality 60 years ago,” he says. It was a struggle that brought his black father and white mother together. (They married in 1944. All of her siblings abandoned her, “and never came back.”) “We won the civil-rights legislation in the ’60s,” Mr. Steele says, “and the term ‘equality’ is exhausted now. And it’s lost much of its mystique—because you can measure it.”

Americans look at statistics and disparities and many think “there’s another explanation for inequality other than racism,” Mr. Steele says. “Inequality may be the result of blacks not standing up to the challenges that they face, not taking advantage of the equality that has been bestowed on them.” He points to affirmative action and diversity—“the whole movement designed to compensate for the fact that blacks were behind”—and says that blacks today have worse indices relative to whites in education, income levels, marriage and divorce, or “any socioeconomic measure that you want to look at” than they did 60 years ago.

“It’s inconceivable,” says Mr. Steele, “that blacks are competitive in universities today.” In the 1950s, by contrast, they matriculated with slightly lower grade-point averages than whites and graduated with GPAs slightly higher than whites. “Nobody gave them anything,” Mr. Steele affirms. “They didn’t want them in universities then. We would never put our race on an application, because it would be used against us. The minute we started to get all these handouts from guilty America in the civil-rights era, we entered this uninterrupted decline.”

Equality, Mr. Steele suggests, no longer offers an alibi for black underperformance. Equity, by contrast, “is above all that.” Its absence is “just a generalized sort of evil.” Black leaders and white liberals “wanted a new, cleaner, emptier term to organize around. And equity was perfect because it meant absolutely nothing.” It allows whites, he says, to prove themselves to be “innocent” of racism. “The emptiness is what invites them in, and they say, ‘Yes! Oh my God! We’ve got to help blacks create and achieve equity. Because it will show us to be redeemed of our racist past and therefore empower us’ ”—even as it empowers the black-community leaders who are their moral notaries. He describes this compact as a “nasty little symbiotic bond between white and black America,” with each using the other “to gain power and moral legitimacy.”

Mr. Steele laments that liberal America is “still not ready to talk realistically and frankly” about race. What is obvious to him, and, he says, “obvious to millions of Americans, is the fact that America has made more moral progress in the last 60 years regarding race than any nation, country or civilization in history.”

He describes this progress as “miraculous,” and cites his own life as proof. He was born into a deeply segregated America where every aspect of life was racially calibrated. In 1946, when his mother showed up at a Chicago hospital in full labor, nurses ushered her into the maternity ward. When her husband arrived after parking the car, the nurses realized that the baby wasn’t going to be white. They pushed her into the elevator, which descended to the basement, where the “colored maternity ward” was. This was where Mr. Steele and his identical twin brother, Claude, were born. (Claude Steele is also at Stanford, a psychology professor who has studied “stereotype threat” and its effects on minority academic performance. The twins hold polar opposite views on race.)

Mr. Steele encountered plenty of discrimination in his youth. He couldn’t be a paperboy because they wouldn’t let black kids ride a bike through white neighborhoods at 6 a.m. He couldn’t be a caddy on a golf course. He couldn’t wash dishes at the local Greek restaurant because people would see his black hands on the plates. He couldn’t work at J.C. Penney because he couldn’t be seen laying clothes out on display. He couldn’t go to the schools he wanted because all schools were segregated.

While pursuing a doctorate in English at the University of Utah in the mid-1970s, he had to go to court to get an apartment to live in. “Landlords didn’t want to rent to blacks,” he says. “The first housing desegregation lawsuit in the history of Salt Lake City—I filed it.” Offered a job as a literature professor at the university after earning his doctorate, Mr. Steele preferred a position at California’s San Jose State University. He and his Jewish wife, Rita (whose father escaped the Holocaust), wanted to get away from the racism they faced as an interracial couple in Utah.

“Every aspect of life assaulted me as a black,” Mr. Steele says, and things didn’t start to “really, deeply change” until he was in his 30s. “Because I’m that old,” he says, “I have segregation flashbacks” when walking by the lobby of a luxury hotel. When he was a kid, he wouldn’t dream of crossing the threshold into such a place.

“The point I’m making,” he says, “is that I know what racism really is like, what inequality is like.” Today, by contrast, blacks enter the American mainstream as a matter of course, where “they’re far more likely to run into racial preferences, be celebrated for their race, be promoted above their skill levels, than held back.” Mr. Steele says that he doesn’t know “anywhere where blacks are held back. They’re not just pushed forward, but they’re dragged forward into American life.”

That, he says, is a tragedy: Black Americans had “the hell knocked out of them in the mid-’60s” by freedom. “We had borne up under every abuse, every torture. But we had no experience in freedom. We didn’t know what freedom required. We didn’t know how much individual responsibility you have to take on to thrive in freedom.”

How could black Americans have been prepared for freedom? “They should have been left alone, as Frederick Douglass said,” Mr. Steele responds, invoking the 19th-century abolitionist. “Left alone.” Then, says Mr. Steele, they would discover “other talents, other attitudes, other ideas of responsibility.” Instead of thinking that “one has to be blacker than thou, they will actually begin to say, ‘We’ve got to have the skills. We’ve got to make a contribution. We have to join America. We are America.’ ” But today’s America is “too cowardly to do it.”

Mr. Steele again invokes his father, born in 1900. Whites didn’t feel “guilty” about blacks back then: “They didn’t give a damn about my father.” Shelby Steele Sr. taught himself to read and write, built a business, a family, a life. “Everybody in the neighborhood I grew up in in Chicago did that.” Blacks were making economic progress, Mr. Steele says, “until American liberalism came in under Lyndon Johnson and said, in effect, to black people, ‘We don’t really have any faith in you. We don’t believe you can do it on your own. We hurt you, so now we’ll make it better.’ ” A downward spiral ensued in much of black America. The three houses Mr. Steele’s father fixed up and rented fell victim to blight. In the end, as he writes in “White Guilt,” “the family signed them over to their nonpaying renters for nothing, happy to be rid of the liability.”

White America continues to determine the lives of black Americans, Mr. Steele says: “Patronizing black people is just a form of white decency,” burnished by concepts like systemic racism and white privilege. “ ‘We’re still in charge of your life,’ ” white Americans say to blacks. “ ‘You do what we tell you.’ ” And so, Mr. Steele says, “we’ve become slaves all over again. And we run around, coming up with words like ‘equity,’ trying to jack the white man up.”

Yet Mr. Steele also sees “more and more blacks” pushing back against “the tribalism of race” as it collides with the “reality of freedom.” He views the Black Lives Matter movement as a desperate attempt to salvage tribalism. For all his indignation, Mr. Steele foresees a better future. “Millions of black individuals, living their lives as individuals, will take us beyond tribes and into true American citizenship. Many blacks are thriving already. Their children will do even better.”

Mr. Varadarajan, a Journal contributor, is a fellow at the American Enterprise Institute and at New York University Law School’s Classical Liberal Institute.