Third Set Perspectives

Is it possible to change the conversation in Washington from its current focus on the federal deficit to the much more pressing issue of massive unemployment? Here's a good argument for finding a way:

http://www.nytimes.com/2011/06/26/business/economy/26view.html?_r=1&scp=2&sq=payroll+tax+&st=nyt

What's the Objective for Black Americans? Black Unity or Full Participation? Do We Really Need To Ask?

Last month, two media-savvy Princeton professors engaged in a very sharp, very public disagreement about President Obama's record on black issues. Their barbed exchange, in turn, led to heated follow-on debate, including this op-ed in the Los Angeles Times by Erin Aubry Kaplan.

http://readersupportednews.org/opinion2/277-75/6322-for-blacks-a-rift-over-obama

Kaplan deftly captures the contretemps between Cornel West and Melissa Harris Perry. But her own analysis veers off course into a classic, but illustrative, confusion of means and ends.

Kaplan argues that the West/Perry dispute is a reflection of an age-old conundrum for black Americans: Is our objective full participation the mainstream of American society, or is it a black nationalism that builds and sustains unity among black Americans?

That question mischaracterizes the dispute between West and Perry. It conflates an end--full participation in this society--with a means--black unity. A better question is this: Given that the objective must be full participation, how is Obama performing? Is his refusal to adopt the language of black unity, which so infuriates West, an abandonment of the interests of black Americans?

Black unity was an essential, and effective, strategy in the Civil Rights era, when the struggle was about a set of laws and practices--Jim Crow--that affected all black Americans. But one of the main reasons it's been so difficult to make progress as a group in the half century since the Civil Rights era ended is that today's challenges impact different groups of black Americans in very different ways.

Today's challenges are numerous, but here are three that should be on anyone's list: an Achievement Gap in education that prevents almost half of black children from even dreaming about the jobs that lead to a middle-class lifestyle; a War on Drugs that creates a new Jim Crow in inner cities; and a deterioration in the black family that results in 70% of black children being born to single parents. These issues may be of mostly academic concern to middle and upper-middle-class blacks. But they are literally matters of life and death for the poor black Americans for whom West and Perry profess to speak.

As a political strategy, black unity cannot have a significant impact on any of these issues. But these are the issues that must frame any debate about Obama's record on the things that matter most to underprivileged black Americans.

How does that record look?

Obama has done a lot on education. He has expanded access to Pell grants, and provided new funding for community colleges. His Race to the Top program will send billions of dollars into schools that do a better job of educating black students. But he has been unable to find ways to scale other programs that have already been proven to make a real difference, programs like Teach For America, KIPP, and the Harlem Children's Zone.

By contrast, Obama has been missing in action in the War on Drugs. He announced last week that he will start to bring troops home from Afghanistan. But he has refused to wind down the War on Drugs, an ineffective, costly, and vastly destructive program that consigns millions of non-violent young black men to a second-class citizenship little better than the segregated lives of their grandparents.

On the black family, Obama sets a wonderful example. But that example, by itself, will do nothing to reverse the tragic dissolution of family structure in black communities. Obama occupies the bully pulpit, and could be vocal about this issue. It is very possible that anything he says would be misinterpreted, and he would run the risk of a Bill Cosby-like pillorying. But given the gravity of the situation, that's a risk worth taking.

Our challenge today is to find effective strategies to address these issues. The next time Cornel West and Melissa Harris-Perry bring their formidable intellects to bear on the challenges that confront black Americans, let's hope their conversation helps us find them.

This is a little dense, but the fundamental point is clear--the derivatives market is still out of control. What it's doing to Greece is amazing, but no less amazing than what it did to the U.S. economy. But what's most amazing is that the financial services industry is still able to fight off any meaningful regulation of derivatives.

http://www.nytimes.com/2011/06/23/business/global/23swaps.html?ref=business

Black America and the Financial Services Industry

In the late 1940’s, millions of American families used mortgage loans to purchase homes, planting the seeds that blossomed into the bulk of their descendants’ wealth. Black Americans missed that wealth creation opportunity, however, because banks would not make loans in the communities where they lived.

In the late 2000’s, millions of American families lost a substantial portion of their household wealth when the real estate bubble burst. For black Americans, however, the loss of wealth was twice as severe as for whites, because banks and other financial institutions had targeted their neighborhoods with predatory home equity loans.

Burned once when banks refused to make normal loans, burned again when banks refused to stop making toxic loans. These episodes, separated by two generations, illustrate a critical but under-explored dimension of black Americans’ struggle to secure a place in the American mainstream—our relationship to the most powerful entity in this nation, the financial services industry.

Bulls and bears are not the first images that come to mind when most of us think about the factors that help or hinder black Americans. And the barons of Wall St. do not wake up in the morning wondering whether the decisions they make before sundown will advance or retard black peoples’ progress.

But the financial services industry has a significant stake in the issues that matter most to black Americans. And it has the economic and political might to insure that those issues are resolved in its favor. A black agenda for the 21st century requires a far better understanding of the financial services industry and its stakes in the public policy issues that are most important to us.

Where we can make common cause with the financial behemoth? Where do our interests conflict? As it turns out, there are meaningful opportunities to work with the industry on specific issues. But on a larger scale, there is a fundamental opposition between the public policy that benefits Wall St., and the public policy that best meets the needs of black Americans.

Very little of significance happens in America without the support, active or tacit, of the financial services industry. The commercial banks, investment banks, insurance companies, hedge funds, private equity funds, bond traders and others who make up the industry exercise vast control over Main St. businesses and the Fortune 1000, Congress, the White House, the Federal Reserve and the other agencies that are supposed to regulate them.

So how would the financial services industry, the industry that accounted for more than 40% of all the profits earned by U. S. businesses in 2007, that caused the worst economic collapse since the Great Depression, that pays its executives record bonuses despite a tepid recovery and high unemployment in the real economy, look at today’s black public policy agenda?

First, two caveats: Neither the financial services industry nor the black community in America is a monolith. Investment bankers are different from private equity partners, just like black doctors and lawyers are different from black high school dropouts.

Next, there is no universally agreed-upon black public policy agenda. Bill Cosby’s black agenda is not the same as Michael Eric Dyson’s. Tavis Smiley’s is memorably different than Barack Obama’s. So the issues I highlight here are mine; those that, in my opinion, are of uppermost importance to black Americans: the Achievement Gap in education, the ill-conceived War on Drugs, and the health disparities that make black lives shorter and sicker than white ones.

Education is the single most important determinant of a black American’s chances in life. Black Americans with good educations, and the right work ethics and value systems, can aspire legitimately to any prize America has to offer—the CEO’s office at a Fortune 500 company, the tenured chair at our finest universities, even the White House. Without education, black Americans inhabit a world of few good options, enduring high rates of unemployment, sickness, incarceration and premature mortality.

Thus the large and growing gap between the academic progress of black students and their white and Asian peers is of paramount concern. If we cannot find a way to narrow and ultimately eliminate it, the Achievement Gap threatens to undo all of the progress black Americans have made since the Civil Rights era.

The Achievement Gap is a problem that we know how to solve. It persists because we have not found the political will to implement at scale the kinds of programs that have succeeded in even the most challenged communities—programs like the Harlem Children’s Zone in New York, the KIPP schools in three dozen communities around the nation, the Teach For America classrooms in dozens more.

The financial services industry has been a generous contributor to each of these programs. The question, from a public policy perspective, is whether the industry would be as willing to fund their nationwide implementation—an expensive proposition, to be sure—with government-imposed tax increases as it has with voluntary tax-deductible contributions.

The answer, I believe, is a qualified yes. Wall St. hates paying taxes. Income tax increases take more money out of its pockets than those of any other Americans. But the industry also recognizes the need for a continuing stream of highly educated analysts and executives to keep the profits flowing.

As long as the industry could be certain that increased taxes would be used effectively to create a reliable pool of high-quality human capital—extremely well-educated, driven, and financially-motivated people—there is an opportunity, I believe, for black Americans to enlist Wall St. in a major national effort to eliminate the Achievement Gap and produce better educational outcomes for all Americans.

The War on Drugs, unfortunately, is another story. Its impact on poor black communities has been devastating: an entire generation of inner-city black youth has come to see prison as a rite of passage, one that, they discover only after entering the prison-industrial system, leaves them as much second-class citizens as their great-great-grandparents were in the years before the passage of the Civil Rights-era laws. Their prison records leave them unable to vote, to get a decent job, to live in public housing, or to take advantage of other basic rights that most citizens take for granted.

For the financial services industry, though, the prison-industrial complex is a boon. It makes money financing the construction of the prisons that house black people convicted of drug crimes. It makes even more money helping states and cities float bonds that pay for prison operating costs—guards’ salaries, food, and the other expenses that make the per-prisoner cost of incarceration higher than the per-student cost of education.

And the industry has no real reason to care about the catastrophe that the War on Drugs has visited on poor black communities. The people who work on Wall St. see those communities only through the darkened windows of commuter trains speeding from the Connecticut suburbs to Grand Central Station. They make money whether or not young black men who sell drugs on street corners have access to decent educations, whether drug addicts end up in cost-effective rehabilitation programs or in expensive, habit-forming prisons, whether or not the American justice system continues to be perverted by rulings that limit habeas corpus and the protection against unreasonable searches by police agencies.

The War on Drugs and the prison-industrial complex are critical issues for black Americans. But we will not be able to rely on the financial services industry for help in resolving them.

Health disparities, by contrast, present a real opportunity for collaboration with the industry. Black Americans experience higher rates and more severe consequences from large numbers of debilitating health conditions—obesity, heart disease, strokes, breast and prostate cancer, diabetes and HIV, to name just a few.

These disparities contribute to the large and growing cost of Medicaid, one of the biggest drivers of the federal budget deficit that has become the major topic of Washington’s more-heat-than-light debate. While bond traders and other participants in the financial services industry make money financing the deficit, the industry as a whole is acutely sensitive to the long-term threat of uncontrolled structural imbalances in the federal budget.

Black Americans and the financial services industry share an interest in lowering the costs that result from health disparities. Like education, this is an issue that offers an opportunity for collaboration.

Despite these opportunities, however, I believe black Americans will find it difficult to fashion meaningful alliances with Wall St. That’s because of a fundamental difference in viewpoint on another issue, one that is of paramount importance to Wall St.—government regulation.

Capitalism is a good thing for black Americans. It’s the most dynamic system of economic organization that human beings have devised, the system that creates the greatest opportunity for people on the bottom to move up to the middle, and for people in the middle to move to the top.

But it is in the best interests of black Americans that the engine of capitalism is constrained by strong government regulation. And that’s especially true when it comes to the financial services industry. As we’ve seen so clearly in the past three years, a poorly-regulated financial services industry is fatally prone to the kinds of animal-spirits-driven excesses that gave us the Great Recession from which we are only beginning to recover.

It is no accident that the period of greatest progress for black Americans coincided with the period of strongest regulation of the financial services industry. From the administration of FDR through the administration of Ronald Reagan, New Deal laws—the Security and Exchange Act, the Glass-Steagall Act and others—combined with aggressive regulatory enforcement, produced an unprecedented era of financial stability in America.

But for the financial services industry, government regulation is an anathema. The industry views regulation as restrictive, ham-handed and a barrier to making as much money as possible. The industry recognizes that financial instability creates massive shocks in the real economy, but it also knows that, for people on Wall St. who can keep their heads, financial instability also creates massive opportunities.

So the industry has used its vast resources to steadily strip away the regulatory protections that gave this country a half century of relative financial stability. In recent years, Congress has repealed the Depression-era law that separated commercial banking from investment banking, and banned the regulation of credit-default swaps. Regulators, meanwhile, dramatically increased the amount of leverage allowed to investment banks, and failed utterly to update regulations to keep pace with financial innovation.

And when the industry’s tactics led to exactly the outcome that one would expect—the greatest financial disaster since the Great Depression—black Americans experienced historic levels of unemployment, and a catastrophic loss of housing-based wealth. Wall St., meanwhile, is making more money than ever before, paying record bonuses, and represents even more systemic risk to the economy than it did prior to the meltdown in the fall of 2008.

On some of the public policy issues that are of greatest importance to black Americans, there is meaningful opportunity to make common cause with the financial services industry. But on the public policy issue that is of greatest importance to the financial services industry, there is a fundamental opposition of interest with black Americans. Finding a way to work together on our issues, while agreeing to disagree on the industry’s, will be a major challenge to any effort to find ways to work with Wall St.

Imagine this:

It’s the late 1960s. President Lyndon Johnson has signed the Civil Rights Act, the Voting Rights Act, and the Fair Housing Act. But the legislation has not brought racial harmony to America. Black people are rioting in the cities. White people are wondering what’s happening to their country.

Somewhere, a group of white men are gathered around a table. They might be in a cheap hotel, or in a posh country club; it doesn’t really matter. It’s not the location that’s important; it’s the men in the room. Because these are
not your ordinary white men. The men sitting at this table are the true, died-in-the-wool racists, the ones who hate black people with an all-encompassing passion.

On this day, their rage fills the room. Emanating from every pore in their bodies, it seeps from the ceiling, it coats the walls, it sticks to their shoes as they pace the floor. These are men who are used to power. They know their way of life is under attack. But they haven’t given up.

“How,” they ask themselves, “can we do the greatest damage to those (and I invite you to ask yourself how they will pronounce this next word) Negroes? How can we prevent them from competing with us for the best schools, for the best jobs, for control of the government? Without Jim Crow, how can we keep our feet on their throats?”

They try out idea after idea. Would more white-robed Klansmen do the job? Could they find a way to fill the Supreme Court with men who think like they do? Could they flood black communities with drugs? But none of the ideas seems sufficient.

Suddenly, one man stands up. “I got it,” he drawls, an evil smile creeping across his lips. “What we have to do is make their children blind.

“Not physically. Just mentally. Let’s convince them that the best way to use this ‘equality they’ve just won is to spend their lives trying to entertain us. What if we made it possible for a handful of them to earn a fortune by doing something that does no harm to us—something like singing, or dancing, or dribbling a basketball?

“And what if make them think that the easiest way to get that fortune is to behave in a way that will cripple them in school, that will make them unfit for the best jobs?

“What if we can make them think studying and saving and delaying gratification, the ways you really get ahead in this country, are the province of white people, things ‘real’ Negroes just don’t do? What if we pay a few Negroes small fortunes to act like idiots, then turn them into role models the rest admire and emulate?

“If we can do that,” he said, “we’ll make them blind. And we’ll keep the power in our own hands.”

Did anything like this actually happen? Did a group of white racists get together secretly 40 years ago and concoct a master plan to cripple black Americans? I don’t know. But I will tell you this—if they did, they could not have come up with a better plan than convincing our children that studying hard, speaking standard English and succeeding in school are “acting white,” while being an ‘”authentic” black American means strutting around in oversized jerseys and sagging pants and flashing gold teeth with every smile.

This is a Dickensian era for black Americans. For some of us, this is truly the best of times. Those of us with the right educations, the right work ethics, the right set of values, can aspire legitimately to any prize America has to offer: the CEO’s office in our largest corporations, the tenured chair at our best universities, the bonus check from leading Wall St. firms, and even the White House.

But for other black Americans, this is among the worst of times. Most of our inner-city children go to overwhelmingly segregated schools. Half of them do not graduate from high school. Those who don’t, find themselves living in a world of few good options. So our rates of unemployment, drug addiction, incarceration, and premature mortality far exceed those of any other American ethnic group.

The civil rights movement of the past century, the one that culminated in the landmark legislation of the 1960s, was in one sense a spectacular success. It removed the legal barriers to black advancement and gave us the right to vote, and those victories have withstood the best efforts of those who continue to oppose us to overturn it.

But in another sense, the success was only partial. Tactics like affirmative action benefited only those black Americans who were able to walk through the doors of opportunity when they were cracked open, and remain standing when the real competition started. If you did not have a decent high school education, the chance to attend Harvard was irrelevant.

More radical tactics, such as school desegregation, were beaten back. The sound and fury came from places like South Boston, where working-class white ethnics fought desperately to keep black children from Roxbury out of their sub-standard neighborhood schools. But the essential battle was lost in quiet courtrooms where affluent white suburbs defeated efforts to allow inner-city children to integrate their excellent, well-financed schools.

Last century’s movement had the benefit of a clear target—a set of laws and practices that enforced segregation and discrimination. In our time, the target is much more difficult to define. Institutional racism, of course, remains a potent and ever-present reality. Just look at the housing market. A generation ago, banks and the Federal Housing Authority used redlining to keep black Americans in segregated neighborhoods. In this century, new lenders, with the support of Fannie Mae and Freddie Mac, used aggressive promotion of toxic subprime loans to rob black Americans of the hard-won equity in their homes.

We all know that institutional racism has not lost its grip on our society. But how can we talk about it effectively when an African-American resides at 1600 Pennsylvania Ave?

At the same time, we also know that many—maybe most—of the problems of black America are self-inflicted. We can’t blame white people for the fact that 70% of black children are born to unwed mothers. We can’t blame white society for the fact that so many black fathers are not present in their children’s lives. We can’t blame anyone but ourselves for our failure to hire black professionals and service people, to keep our money in our own community, like other ethnic groups do.

So a 21st century civil rights movement would have challenges that the movement of the last century did not confront. What would be its target? The institutional racism that is so difficult to isolate and define? Or the self-destructive behavior that is so difficult to talk about without giving ammunition to our enemies?

What would be its tactics? Marches and demonstrations are passé. Boycotts no longer seem effective. Our elected officials are able to defend the victories of the past century, but have not figured out how to address the challenges of this one. George W. Bush’s appointments to the Supreme Court insure that it will not be active in our favor for decades.

Even the election of a black president seems inadequate. Barack Obama finds it easy to denounce self-destructive behavior by black people, but has not said one word about institutional racism since starting his campaign for president. And who can blame him? He is a professional politician, who understands there is no political upside for himself or his party in calling attention to the persistence of the social and institutional barriers to black advancement.

I propose education as the civil rights issue of the 21st century. I believe black American children are as intellectually capable as any other children in the world. I believe that, given the right principals, the right teachers, and the right peer culture, they can succeed academically. And I believe that academic success will position them to enter the American mainstream and compete on an equal footing with anyone they come into contact with.

Evidence abounds that even in the worst socio-economic circumstances, black children can be successful students. For more than 15 years, Teach For America has demonstrated that putting the top graduates from America’s best universities in inner-city classrooms, infusing them with the belief that all children can succeed, and insisting that failure is not an option leads to astonishing academic progress.

Building on Teach For America’s success, the KIPP program has built entire schools around the same set of concepts. Here in Atlanta, KIPP’s WAYS middle school began six years ago with none of its students achieving grade level on Georgia’s CRCT exam. Three years later, when those students graduated from the eighth grade, every one of them was at or above grade level in reading and math. In New York, Geoffrey Canada’s Harlem Children’s Zone combines parental counseling, early-childhood education and charter schools to eliminate the academic achievement gap between students above 116th St. and those living on the Upper East Side.

A movement built around education would have other powerful advantages. It would not be race-specific; a national commitment to education would benefit children of all races, making it politically easier to bring about. It would also address our national security. In this century, the greatest challenge to America’s dominance will not come from the military might of other nations, or terrorist groups. It will come, instead, from countries like China and India, who are graduating ten times the number of scientists and engineers that we are, and who will use their superior educational attainments to overwhelm us economically.

And while an education movement would not be race-specific, it would deliver a disproportionate share of its benefits to black Americans. We know that the combination of education, work ethic and values can enable black children to live successful lives. Based on the work of pioneers like Teach For America, KIPP and Geoffrey Canada, we know how to deliver those benefits to them.

Remember that room full of white racists? What we need now is our own room, a room suffused with determination rather than hatred, occupied by black people with the courage and insights needed to spearhead the civil rights movement of the 21st century.