Since 1619, blacks have sat on the wrong side of the trade in America. First brought here as physical capital, the eventual emancipation from physical bondage and chattel slavery has morphed into most blacks occupying the lower rung of the capital ladder holding only a fraction of the wealth that whites as a collective possess.
A Pew study done in 2018 found that 37% of blacks felt financially secure compared to 54% of whites. While white households had on average 31 days of income in savings, black households, according to Pew, had five days. The numbers for both races are unacceptable, as far as I am concerned, but for blacks, these numbers are dire.
We have heard politicians cite these and other numbers that document the racial wealth gap. U.S. Representative Maxine Waters, Democrat of California and chairwoman of the U.S. House Committee on Financial Services, and U.S. Senator Sherrod Brown, Democrat of Ohio and chair of the U.S. Senate Committee on Banking, Housing and Urban Affairss have consistently raised concerns that the financial sector has turned a continuous blind eye to the capital needs of blacks.
Unfortunately, Mrs Waters and Mr Brown along with other politicians have offered passive policy proposals for addressing the problem. To severely summarize their stances, the answer lies in current market participants to divvy up some of their portfolios and distribute a part of their pies to blacks. “Cutting the check”, in my opinion, in the form of diversity, equity, and inclusion programs or providing blacks with a couple seats on the board of Goldman Sachs or Morgan Stanley does nothing for the systematic ills of blacks.
Note here that I say “systematic” versus “systemic.” We often hear the phrase “systemic racism” thrown around without breaking down its meaning. Systemic is defined as affecting the body as a whole. Which whole body are we referring to when we talk about systemic? I suspect the whole body being referred to is one that encompasses everyone in America, including those who may have already started with a leg up in terms of capital holdings.
Black concerns and issues are being drowned out or diluted by being lumped into a bigger body of a “people of color.” The implication here is that racism, the use of policies that serve to deny a people access to financial, economic, and civil liberties because of their race is qualified by something affecting the whole body. Rather, racism is systematic, where interconnected rules and institutions are put in place to deny a racial group access. Systematic is targeted. Systemic is dilution.
Any advocacy for access to capital has to use a systematic approach. A systematic approach calls for action. It is dynamic because the intent is to re-engineer a system. Sometimes the re-engineering calls for increasing capacity; bandwidth, by building additional nodes, processors, and routers. Systematic may also call for creating an individual, separate network that parallels the faulty one. At some points the two will meet where trading opportunities allow.
One trade opportunity is becoming active in the interbank market. Banking and capital flow are at the heart of a transactional, market economy. Today’s technology combined with black intellect provide a basis for black involvement
I am not naive. I don’t expect involvement to happen overnight. What I do want to see is movement toward this end. This will require focused advocacy and new political leadership. The old heads, who are still stuck in 1619, can’t lead this evolution.
28 September 2022
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