A test project at New York City’s notorious Riker’s Island jail ended last month without accomplishing its key objectives. But behind the failure of the ambitious experiment lies a tantalizing glimpse of a force that could be a powerful component of a new civil rights strategy for the 21st century.
The goal of the Adolescent Behavioral Learning Experience project was to reduce recidivism among young black and Latino inmates at Riker’s. It did not succeed. What it did, however, was suggest that the power of the marketplace, and in particular the financial services industry’s insatiable drive to make money, can be introduced into the struggle to improve the lives of poor inner-city residents.
The ABLE project was not financed by taxpayers. Instead, the money came from Goldman Sachs, the poster child for all that’s good—and all that’s bad—about Wall St.
Goldman put up $7.2 million to finance the project. The investment bank would have earned up to a 30% return on its investment if the recidivism rate among program participants at Riker’s had fallen by 10% or more. Since the rate did not fall, Goldman will lose the money it invested—a loss cushioned by a $6 million guarantee from former New York Mayor Michael Bloomberg’s foundation.
The most interesting thing about the ABLE project is that it was an effort to harness a key interest of black Americans—keeping kids out of prison—with the key interest of Wall St.—making money.
Wall St. is the most powerful force in America’s economy and politics. It accounts for about 40% of all of the profit earned by U. S. corporations. Its excesses brought the world economy to the brink of collapse six years ago, yet its critical role forced U.S. policy-makers to rush to its rescue with hundreds of billions of taxpayer dollars in their hands.
I know it’s wildly counter-intuitive to suggest any kind of linkage between black America and Wall St. It’s as if they exist in non-intersecting universes, a black one dedicated to freedom, justice and rights, and a Wall St. one preoccupied with stocks, bonds, and commodities.
But the absence of a meaningful connection between black Americans and Wall St. is a problem, and perhaps an opportunity. The problem: Black America’s irrelevance to the financial services industry makes it impossible to use the industry’s virtually unlimited political and economic power to our advantage. The opportunity: To reinvigorate our struggle for full participation in American society by finding a way to align at least some of our major interests with the Street’s singular and unwavering focus on making money.
If black America can link even a small part of its agenda to the Street’s self-interest, it could open a new front in our battle for a firmer foothold in the American mainstream. So, baldly, my question is: Is there a way for Wall St. to make money—lots of money—on real progress for black Americans?
The answer should be a resounding Yes. According to one estimate, http://www.popularresistance.org/incarceration-up-education-down-americas-cannibalistic-profiteering/ the lifetime cost to society of one high-risk youth who goes from juvenile detention to a juvenile correction facility to an adult prison is $3.8 million, while the lifetime tax contribution of that same youth if he goes from a high-quality after-school program to a publicly-funded university for four years is $1 million. That’s a difference of $4.8 million PER YOUTH. Multiply that by the 2.5 million Americans who are incarcerated at this moment, and you have a potential economic swing of $12 trillion.
That’s an arbitrage opportunity for Wall St. The same creativity the Street used to invent collateralized debt obligations during the subprime mortgage frenzy could be channeled to developing financial instruments tied to the dollar benefits of getting children out of college instead of into prison.
Over the long term, it is significantly less expensive to invest in the early education and child care programs that keep children out of the traps of crime, teen pregnancy and dropping out of high school, than it is to pay the downstream costs of incarceration, welfare and dependency.
But our political system is unable to grasp the opportunity to lower those downstream costs. In part, that’s because those costs are income to politically powerful entities—prison companies and their employees, local law enforcement agencies, and others. And, in part, it’s because so many local and state legislatures, and half of Congress, are controlled by a Republican party that is actively hostile to the interests of black Americans.
Wall St., however, can do what the political system can’t. It can invent financial instruments that enable it to profit from the difference between what governments plan to spend on incarceration, welfare and dependency, and what they’d actually spend if hundreds of thousands of young people went to college instead of prison.
What Wall St. wants, Wall St. gets. The challenge for everyone interested in progress for black Americans is to make Wall St. want what’s good for us.