Let’s Remember the Dream by Closing the Wealth GapAug 29, 2013. Written by Anthony Hales
Yesterday, we celebrated the 50th anniversary of Martin Luther King Jr.’s iconic “I Have a Dream” speech and the March on Washington for Jobs and Freedom in a ceremony that was capped off by the Commander in Chief himself. I watched as speaker after speaker paid homage to the late great civil rights leader and gave their rallying cries to the masses to fight on. It was beautiful moment and offered a glimpse into history for those like myself who weren’t alive during the original march.
The only damper on the ceremony was the dreary weather that hovered over the nation’s capital yesterday, but given the status of the goals of the original march, jobs and freedom; the backdrop was perfect. As far as the forecast of jobs and freedom goes, the rain may have stopped but it’s still cloudy.
While we definitely have made a lot of progress in the fight for civil rights, we are still far from achieving the economic freedom that King dreamed about. The economic plight of the African-American community may be much improved from the era of racially restrictive housing covenants and massive redlining (a practice by which banks avoided giving loans to minorities or for projects in minority neighborhoods) but we still find ourselves in an era where the median white family’s wealth is more than 20 times greater than that of the median black family.
There is much work to be done and this problem will be more difficult to eradicate than other issues of the civil rights struggle. Unlike discriminatory hiring practices or racially restrictive housing covenants, there are no laws that can serve as a quick fix to the problem. It is far too complex.
First, there is the generational wealth gap that goes back to the days of slavery. The average African-American family just doesn’t have an abundance of land or family wealth to pass down from generation to generation. This means that the average black kid won’t be able to borrow money from their parents to pay for college or put a down payment on their first house. Often we are simply starting off the wealth race behind our peers.
Then, there are cultural issues that plague even wealthy and upper middle class blacks. Far too often, financial literacy is not a major topic of discussion in our households. The housing market crash exposed that many middle class blacks were being pushed into sub-prime mortgages without realizing that they were eligible for much better loan terms. Furthermore, too many of us have bought into the image driven culture which values depreciating assets as signs of wealth. Fancy cars, clothes and smartphones serve as status symbols, while things such as CD’s, bonds, and mutual funds are barely mentioned.
To be clear, this is not simply a “black” problem as western culture in general tends to be very materialistic, but for a group of people seeking to close a gaping economic gap, these habits are counterproductive.
I am not excluding myself either. Upon graduating college and getting a new job, the first thing I did was buy a truck and finance it for a period longer than I care to admit. While I love my truck, that $400 a month would have served me much better as an investment.
Thankfully, we can change this.
In order to create a culture of financial responsibility, we must first start in the home then in our schools, churches and other community pillars. I would encourage any parent to begin discussing finances with their kids at an early age. Help them set-up bank accounts, buy bonds or even let them run a small candy store.
These efforts should be replicated in our schools. Courses on financial management and investing should be heavily encouraged or even required in high school or middle school. Let’s free our teachers from the slavery of standardized testing and allow them to produce our next generation of great investors and entrepreneurs.
Churches and other community institutions have a role to play as well. As a man of faith who understands the historical role of the black church in the African-American community, I was truly disappointed to learn that many African-American churches pushed members of their congregations into sub-prime mortgages through the Wells Fargo emerging markets program. The Ephren Taylor ponzi scheme that swindled over $11 million from black congregations could have been stopped cold in its tracks if the pastors inviting him into their churches had simply done their homework. Warnings about Taylor’s dealings were openly being discussed online for years before the SEC finally charged him. However, no matter how convincing any pastor or salesman sounds, it is up to us to use sound judgment when someone asks us to invest our money.
Finally, the access issue must be resolved. While they may help in the case of temporary economic hardships, payday loans and check cashing services are simply not sufficient tools for people trying to manage money. People living in neighborhoods without banks also find themselves stuck paying high ATM fees to withdraw money from the local corner store. We need more community banks in low income communities.
This is how we should honor King’s legacy; by working to close the wealth gap and achieve the economic freedom he fought for. It has been said that a rising tide lifts all boats and that may or may not be true but no one can dispute that a rising boat lifts all it passengers with it.