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.

Give Hillary a Break

I can’t understand why everybody’s so mad at Hillary Clinton.

I live in a world of Barack Obama enthusiasts. It’s a world of cautious hopefulness, where a fragile optimism born of his surprisingly successful campaign for the presidency runs headlong into the certainty that race remains an unbridgeable chasm in American life.

And it’s a world where, right now, everyone is angry at Hillary. A college classmate, a lifelong Democrat, leaned across the table in a New York restaurant last week and told me, with fire in his eyes, that he’d vote for John McCain before he’d vote for “that abomination.” A teenaged Obama supporter said she “hates” Clinton, and wishes she’d “just go home.” A living room full of successful, middle-aged African-American businesspeople and professionals in Atlanta spent more than an hour throwing verbal bombs at Clinton over cocktails.

The anger emerges, I think, from a feeling of betrayal. Hillary and her husband have “played the race card,” people say, injecting Obama’s blackness into the campaign in a way that has injured his prospects for winning the Democratic nomination. To the inhabitants of my world, that’s a crime, one made more heinous by the fact that the perpetrators are people we’ve admired and supported for years.

I think that feeling of betrayal is misplaced. It is asking too much of the Clintons to expect that they would refrain from raising the race issue in this campaign. Hillary Clinton has spent her entire life working for this moment, when she has the opportunity to become the first woman nominated for President of the United States by a major party. Nothing in her history, or that of her husband, suggests that either of them would lie down and surrender, to Obama or anyone else, when they are this close to the prize.

Race has always been an inevitable issue in this campaign. So long as a black man remained a leading candidate, there was no doubt that sooner or later, the race card would hit the table. From what I hear, Clinton’s people have been pushing the Jeremiah Wright story for weeks, and once the mainstream media bought it, the Republicans and their slime machine, who would prefer to run against Clinton than Obama in the general election, have used their great skills at political character assassination to turn the Rev. Dr. Wright into a white-hating caricature and hang him around Obama’s neck.

Clinton’s use of race as an issue is well within the bounds of presidential-level political campaigning. Richard Nixon used “law and order” as his method of bringing race to the forefront. Ronald Reagan launched his campaign in Philadelphia, MS, with a speech about states’ rights. George H. W. Bush brought us Willie Horton. Bill Clinton castigated the hapless Sister Souljah. George W. Bush’s puppeteer, Karl Rove, spread the false rumor in the 2000 primary campaign that John McCain had an illegitimate black child.

Against this backdrop, the Clintons’ use of Dr. Wright as a foil for white Americans’ latent racial fears and biases is relatively mild. This is something Obama should have been ready for, and as his speech on Tuesday morning demonstrated, he was.

It was almost as if he’d been waiting for the opportunity to elevate America’s discussion of race to a new, higher plane. Because when the opportunity arose, he responded brilliantly. He used his bi-racial background to frame the disconnect between white Americans and black Americans. He correctly renounced Dr. Wright’s most inflammatory remarks, while using his understanding of the prophetic tradition in the black church to explain why he would not renounce the man. And he positioned the race issue as a barrier to meeting the challenges of education, health care, climate change and the economy that affect all Americans, regardless of the color of their skins.

So the question is not why Hillary Clinton played the race card. She played it because she’s trying to become the president. And it’s not about whether Obama would be able to trump it. He did that, indisputably, in Philadelphia.

Instead, the real question now is how white Americans will react. If they allow the senseless—and meaningless—tarring and feathering of Jeremiah Wright to derail Obama’s campaign, then the quiet voice that’s been whispering to the people in my world for months, the voice that says America is still not ready for a black president, will be proven right. But if they’re able to move beyond the Wright controversy and continue to listen to Obama’s message of hope and transcendence, then perhaps the fragile, tender optimism his campaign has stirred in us will be justified.

Supercapitalism

Power and influence in the United States are concentrated in three major sectors—government, corporations, and Wall St. African-Americans have been successful at using one of them—government—in our struggle for full participation in this society. But if Robert Reich is right, the power sector we’ve been leaning on is the wrong one for the 21st century.

Reich is a professor of public policy at the University of California at Berkeley, and served as Secretary of Labor in the Clinton administration. In his new book, “Supercapitalism: The Transformation of Business, Democracy and Everyday Life” (New York, Alfred A. Knopf, 2007), he argues that the forces of capitalism—corporations and Wall St.—are overwhelming the forces of democracy—government, labor unions, and grassroots political organizations—to the detriment of the common good. It’s a forceful and compelling argument. And it does not augur well for African-Americans.

Reich defines Supercapitalism as a dramatic shift in the U. S. and world economies to a ruthlessly competitive market system, in which consumers and investors have been big winners.

“Meanwhile,” he argues, “the democratic aspects of capitalism have declined. The institutions that undertook formal and informal negotiations to spread the wealth, stabilize jobs and communities, and establish equitable rules of the game—giant oligopolies, large labor unions, regulatory agencies, and legislatures responsive to local Main Streets and communities—have been eclipsed. Corporations now have little choice but to relentlessly pursue profits…Democratic capitalism has been replaced by supercapitalism.”

Reich traces the dawn of the era of Supercapitalism to the1970s, when deregulation, the advent of global supply chains, and the migration of powerful new technologies such as semiconductors, fiber optics, and the Internet from the laboratories of the Pentagon to the world of business sent the U. S. and world economies soaring.

“The real explanation” for the triumph of capitalism and the decline of democracy, Reich writes, “involves the way technologies have empowered consumers and investors to get better and better deals—and how these deals, in turn, have sucked relative equality and stability, as well as other social values, out of the system.”

Following the deregulation of the U. S. financial industry in the mid-70s, Reich argues, Wall St. became extremely effective at aggregating the power of investors to force corporate executives to maximize the market value of their companies. If they failed to do that, he says, capital moved quickly and efficiently to more profitable companies, with dire consequences for the laggards.

Corporations responded to Wall St.’s imperatives by becoming equally efficient at aggregating the power of consumers to provide innovative products at low prices. Wal-Mart is the poster child for this phenomenon, Reich notes, using huge economies of scale, relentless pressure on suppliers, and aggressive employment practices to make available a wide variety of goods and services at rock-bottom prices.

Most Americans—African-Americans included—benefit from Supercapitalism, Reich argues. As investors, we like high returns in our pension plans, mutual funds and 401k’s. And as consumers, we’ve come to expect great products at bargain prices, with high-quality customer service available at the touch of a telephone or computer keypad.

But the consequences of Supercapitalism are not so benign for us as citizens, according to Reich. Wal-Mart can’t offer the bargains we find on its shelves without keeping its employees’ wages low and cutting their benefits to the bone. Energy companies can’t heat our homes and power our cars at today’s price levels without polluting the environment and producing global warming. Corporations can’t maximize profits without compensation practices that create a level of income inequality we’ve never seen before in the history of this country.

Something’s badly out of balance in the era of Supercapitalism, Reich says. He locates the imbalance in the widely differing effectiveness of capitalism and democracy in performing their separate and often conflicting jobs.

Capitalism’s job, he says, is straightforward—to grow the economic pie. And, he argues, corporations and Wall St. are performing that job superbly. Democracy’s jobs are much more complicated: determining how the slices of the pie should be divided up, and setting the rules under which capitalism operates. And the institutions of democracy, he argues, are failing in their performance of those tasks.

So what does all of this mean for African-Americans? Does Supercapitalism affect us any differently than it affects other Americans?

African-Americans, like everyone else who lives in this country, are consumers, investors and citizens. As consumers, we benefit from the wide selection of products and services, innovative new offerings, and low prices that Supercapitalism breeds. In fact, because we consume a higher proportion of our incomes than other Americans do, we probably benefit more from Supercapitalism’s consumer impact than most other Americans.

As investors, however, we do not derive the same benefits from Supercapitalism as our white and Asian neighbors do. That’s because we devote a much smaller share of our household incomes to investments than they do.

According to a recent survey conducted by Ariel Mutual Funds and the Charles Schwab Corp.:
• African-Americans are half as likely to be investors as whites are, even when demographic factors such as age, income, gender, family structure, education are held constant;
• 40% of African-Americans with household incomes of $50,000 or more have no money in stocks, compared with just 25% of whites;
• African-Americans who enroll in retirement plans save a median amount of $173 per month, compared with $252 for whites;
• Middle-class African-American households on average have just $48,000 in savings, while their white counterparts hold more than twice that amount, at $100,000.

But it is in our roles as citizens that we suffer most from the effect of Supercapitalism. The issues that are most important to our continued progress toward the social and economic mainstream of this country—education, health care, criminal justice, economic opportunity—are more likely to be addressed in the realm of democracy than in the realm of capitalism.

But as democracy withers under the onslaught of Supercapitalism, our ability to use its levers—courts, legislatures, regulatory agencies—withers apace. And until we learn how to manage the power of post-industrial capitalism, resident in corporations, on Wall St., in Silicon Valley and in the new media that are eclipsing the traditional ones, African-Americans are likely to be net losers in the era of Supercapitalism that Robert Reich so convincingly describes.

Wealth and the American Dream

You may earn just as much money as the white couple whose child sits next to yours in school. Between you and your husband, you may even have a bit more education. But the odds are very high that you have only a tiny fraction of their wealth. That puts you at a huge disadvantage, whose roots lie in a series of overt policies created and implemented by major American institutions for more than two centuries.

Sometimes those policies have come from government agencies. Other times, from banks. This time, in the still-evolving subprime mortgage crisis, they come most often from non-bank lending institutions that aggressively marketed adjustable rate loans, many carrying hidden fees, prepayment penalties and other provisions that put borrowers in financial jeopardy. Whatever the source, these policies have left the typical black family far behind its white counterpart in the pursuit of a solid foothold on the American dream.

Because that white family has wealth, they can send their children to private school if they choose to. They can pay for a life-saving operation their insurance company turns down. They can give their children $50,000 as a down payment on a home in a neighborhood where real estate values are rising. If you don’t have wealth—and if you’re an African-American, the data says you probably don’t—you can’t do these things. And if you can’t do them, your grasp on economic security is weakened, and your ability to give your kids a financial head start in life is non-existent.

The wealth disparity between white and black families is one of the clearest and most damaging results of the institutional racism that continues to plague our nation.

And the data is staggering. According to Melvin Oliver, professor of sociology and dean of social sciences at the University of California at Santa Barbara, and co-author of “Black Wealth, White Wealth,” the seminal study of the subject, black families have only 10 cents for every dollar of wealth that white families have. Even in middle-class black families, Oliver notes, household wealth is only one-quarter that of middle-class whites.

While a small number of Americans build significant wealth during their lifetimes, most wealth is inherited, and most of it resides in the homes we live in. And that’s where the policies of institutional racism come in. From the time the first blacks arrived in this country, there have been virtually insurmountable official barriers to their ability to accumulate property:

• Prior to Emancipation, slaves were forbidden to own property in the southern states where the overwhelming majority of blacks lived;
• At the end of the Civil War, freed slaves were promised “40 acres and a mule.” But that promise was not kept. Instead, the Freedmen’s Bureau gave most of the confiscated plantations to white Northerners, who hired blacks as field hands, initiating the practice of sharecropping that kept blacks from building assets for nearly a century.
• Many whites who did not head south to become carpetbaggers decided instead to go west, where the Homestead Act of 1862 allowed them to claim 160 acres of land. However, says Dalton Conley, director of the Center for Advanced Social Science Research at New York University and author of “Being Black, Living in the Red: Race, Wealth and Social Policy in America,” blacks who tried to take advantage of the Act usually found that their claims were unenforceable.
• The Federal Housing Administration was created in the 1930s to stimulate the growth of the home construction industry. But in order to receive FHA-backed financing, borrowers had to have their homes appraised. FHA guidelines instructed appraisers to color-code houses—green for homes in all-white neighborhoods, red for homes in mixed or black neighborhoods. This is the policy that came to be known as “redlining.” And the vast majority of mortgages were issued for homes in “green” neighborhoods.
• Even today, banks continue to make home loans in areas where home values are increasing. Often, that means in white neighborhoods. Federal Reserve studies show that blacks are 20% more likely than whites to be turned down for mortgages, even when they are equally creditworthy.

Today’s subprime mortgage crisis is the latest in this long and dismal list of practices that impede African-Americans’ ability to build wealth via home ownership.

Last year, according to an analysis of home loans reported under the federal Home Mortgage Disclosure Act, blacks were 2.3 times more likely than similarly qualified whites to get subprime mortgages. And those high-cost subprime loans are about 10 times more likely than prime loans to result in foreclosure.

There are now three major pieces of legislation before Congress to address the subprime mortgage crisis, one from Rep. Barney Frank (D-MA), one from Sen. Chris Dodd (D-CT), and one from the Bush administration. You should pay close attention to their progress. Media coverage of the bills will not be framed in racial terms, but their fates will be key factors in determining whether millions of African-Americans remain on the path to building wealth via homeownership.

Making Your Move Too Late

Hillary Clinton made her move too late. By the time she figured out how to play the race card successfully against Barack Obama, Obama had built a lead in the Democratic primary contest that was too large for Clinton to overcome. So while Clinton has damaged Obama, she has not helped herself. The person she has helped is the typical beneficiary of the race card game: a white, male Republican—in this case, John McCain.

The face on this particular race card belongs, of course, to the Rev. Dr. Jeremiah Wright, pastor of Trinity United Church of Christ, the church Obama has attended for the past 20 years. With a push from the Clinton camp, the acquiescence of the mainstream media, and the enthusiastic support of the Republican slime machine, the Wright story has transformed the Democratic primary contest from one in which race played a surprisingly small role into one in which race is front and center.

Looking at the situation from Clinton’s perspective, it’s not difficult to understand why she was willing to inject the race issue into the campaign. Just a few months ago, she had a seemingly unbreakable grip on the prize she’s been pursuing for more than 30 years—the presidential nomination. But since the Iowa caucus on Jan. 3, she has experienced a stunning series of setbacks:

o She’s lost 28 of the 42 Democratic contests to date, including 11 in a row in one particularly unkind stretch. This means she cannot win the majority, even in the highly unlikely case that she wins all 10 remaining contests;
o She is a million votes behind Obama among U. S. Democrats;
o She is more than 100 pledged delegates behind Obama;
o Her support among the superdelegates is slipping;
o Her campaign has about 10% of the money on hand that Obama’s campaign has.

Clinton found herself losing, badly, to an opponent she could not find a way to slow down. In Obama, she was facing a man with once-in-a-generation political skills, lots of money, an organization that was out-performing hers, and the ability to generate a level of enthusiasm she could only hope to approach. Moreover, he was a black candidate running a non-racial campaign, one in which his race seemed to be an advantage.

In the face of this situation, Clinton needed to do something transformative. And unless your opponent has the bad judgment to get himself enmeshed in a lurid sexual indiscretion, there is nothing that can transform a presidential race like, well, race.

The use of the race card in recent American political campaigns has a sorry but consistently successful history:

o In 1968, Richard Nixon used the code words “law and order” to communicate to every sentient white American the anger he shared with them about race riots in America’s cities;
o In 1980, Ronald Reagan launched his campaign with a speech about “states’ rights” in Philadelphia, Mississippi, the town where civil rights workers James Chaney, Andrew Goodman and Michael Schwerner were murdered by states’ rights advocates in 1964;
o In 1988, George H. W. Bush solidified his lead over Michael Dukakis with the infamous Willie Horton ad;
o In 1992, Bill Clinton reassured white moderates about his position on the culture wars with his gratuitous slap at rapper Sister Souljah;
o In the 2000 Republican primaries, George W. Bush’s campaign manager, Karl Rove, torpedoed John McCain’s candidacy in the critical South Carolina contest with a false rumor that McCain had fathered an illegitimate black child.

So Hillary Clinton’s use of a few snippets from Jeremiah Wright’s sermons as a weapon against Obama fits squarely in a long tradition of race card deployment in presidential races. She did it because she’s trying, against lengthening odds, to win. And because it usually works.

But she’s run into two big problems. One is Obama. His response to her ploy, the speech he delivered last week in Philadelphia, was brilliant. Far from being flummoxed by Clinton’s use of the race card, Obama rose above it with a speech that appears to have trumped the race card in a way we’ve not seen in the past 40 years.

Clinton’s second problem is timing. Maybe she listened too closely to B. B. King and Ernestine Anderson (or perhaps Ry Cooder?) sing the old blues song that cautions against making your move too soon. In any case, it’s simply too late for her to catch Obama in votes or in pledged delegates.

The only way Clinton can win this race is by convincing the Democratic superdelegates to nullify the verdict of the voters and hand the nomination to her behind closed doors in Denver. But the superdelegates, professional politicians all, have surely noticed what I’ve picked up over the past few weeks—that while Clinton supporters will vote for Obama if he wins the nomination, many Obama supporters flatly rule out voting for Clinton.

I spoke last week with a Democratic member of the Georgia House of Delegates, who said there is no way she would vote for Hillary Clinton. “I will vote, of course,” she said. “Too many people struggled and died for the right. But I won’t vote for Hillary.”

The week before, I sat with a group of black corporate executives in a conference room in Las Vegas. All favored Obama. More than half said they would not vote for Clinton. “I just don’t like her,” said one, a black female.

If the superdelegates hand the nomination to Clinton at the convention, I suspect they will tear apart the Democratic Party. There would be a certain irony to that. The seeds of the present-day Democratic Party were sown in the presidential campaign of 1824, when Henry Clay threw his support behind John Quincy Adams to defeat Andrew Jackson, who had received the plurality of votes cast. Jackson ran as a third-party candidate in 1828, won the presidency, and created the modern Democratic Party. The wrong decision by the superdelegates this year could mean that the birth and death of the party both turned on a contested election in which the politicians overruled the voters.

Even if that doesn’t happen (and it’s not likely to), the real beneficiary of Clinton’s use of the race card will be McCain. In the general election contest this fall, the Republicans, along with the talk show hosts, pundits and other parasites who feed off the GOP’s dismembering body, will wave the Wright video images like latter-day Mark Antonys using Caesar’s bloody shirt to excite the Romans.

Obama appears to have survived Clinton’s use of the race card in the primary contest. But the Republicans will not be as delicate as Clinton, nor as tardy. It will take more than one speech for Obama to trump them. What it will require is an American electorate that is able to ignore the distraction of race and focus on issues like the economy, health care, climate change, education, Iraq and Afghanistan. And it is by no means certain that that’s the kind of electorate that will go to the polls in November.

At the Movies

Moral dilemmas—situated in America’s military misadventure in Iraq, the New York City police department’s ongoing battle with organized crime, and the complicity of lawyers and multinational corporations in the poisoning of the environment—drive three excellent movies released this fall.

“In the Valley of Elah,” starring Tommy Lee Jones and Charlize Theron, brings the uncertainties and confusion of the Iraq battlefields to a military base in Texas, where Jones, playing a career Army non-com whose son goes AWOL after returning from Iraq, encounters a disillusioning reality as he unravels the mystery of his son’s disappearance.

“We Own the Night,” starring Joaquin Phoenix, Mark Wahlberg and Robert Duvall, is a prodigal son story set in a decidedly un-glamorous part of New York City, where Phoenix, the club-hopping, high-living son of a police captain played by Duvall, and the brother of a police lieutenant played by Walhberg, must decide which side he’s on when the battle between cops and drug-dealing mobsters heats up and threatens his father’s life.

“Michael Clayton,” starring George Clooney as the “fixer” in a large New York law firm working to protect the interests of a major client, an unscrupulous multinational agri-business company, explores the dilemmas that arise when personal interest, legal obligations, and the broader concerns of society conflict.

Each of these movies is wonderful. “In the Valley” was directed by Paul Haggis, who was the driving force behind last year’s hit, “Crash.” He brings the same visual flair, strong characterization and unflinching honesty to the new film. And Jones and Theron give perhaps the finest performances in their long and very successful careers. Clooney carries the intelligence that characterized his earlier films, “Syriana” and “Good Night and Good Luck” to the new film. And “Night,” while the slightest of the three films, continues director John Grey’s intense exploration of the underside of New York, begun in his earlier efforts, “The Yards,” and “Little Odessa.”

But the theaters where I saw those movies were almost empty. They were the same theaters that filled up for the third installation of the terrific Jason Bourne story two months ago, and that overflowed last weekend for the very forgettable “Saw IV” and “30 Days of Night.” So why is it that straight-ahead action thrillers, loopy comedies and absurd slasher movies get large audiences, while complex dramas about the world we actually live in play to almost-empty rooms?