The Final Frontier Left for African Americans

Right after the devastating aftermath of Charlotesville in 2017 people took to the streets to protest white nationalism, and others removed statues or reminders of America’s brutal history. Rather than talk about the need for more protests and “conversations” Diddy took a different approach on Twitter:

Is this necessary? Well…

There is large disparity between white wealth and the wealth of other races

In 1963, the average wealth of white families was $121,000 higher than the average wealth of nonwhite families. By 2016, the average wealth of white families ($919,000) was over $700,000 higher than the average wealth of black families ($140,000) and of Hispanic families ($192,000).

In other words white family wealth was seven times greater than black family wealth and five times greater than Hispanic family wealth in 2016.

The reality: your white neighbor probably can afford his Jordans! With money to spare.

Whites Faimilies have More in Retirement Than Other Ethnic Groups

In 2016, white families had about $130,000 more (or six times more) in average liquid retirement savings than black and Hispanic families.

It’s not just income differences; Black and Hispanic families have less access to retirement saving vehicles and lower participation when they have access. As it regards to participation, Black workers are somewhat less likely to participate in employer retirement plans than white workers (40 percent versus 47 percent in 2013, respectively).

Black Families Carry Waaaaaayyy More Student Debt than White Families

Black families, on average, have less wealth and fewer private resources, they may be more likely to turn to loans to finance their education. White families are five times more likely to receive gifts or inheritances.

Federal Policies Do Not Promote Black Economic Empowerment

The federal government spends over $400 billion to support asset development, but those subsidies primarily benefited higher-income families. In other words, the higher income (often whiter families) get some great tax breaks from the government.

According to the Urban Institute:

About two-thirds of homeownership tax subsidies and retirement subsidies go to the top 20 percent of taxpayers, as measured by income. The bottom 20 percent, meanwhile, receive less than 1 percent of these subsidies. Blacks and Hispanics, who have lower average incomes, receive much less of these subsidies than whites, both in total amount and as a share of their incomes.

Now lower income families will benefit from safety net programs. And get this: they DISCOURAGE saving. In other words, a family may not qualify for benefits if they have assets in savings 🤔.

What does this all mean?

Simply this: if you’re a non-white you have more roadblocks in front of you to become wealthy. And I didn’t even mention our hip hop culture that tells us to spend our collective $1 Trillion earning power on Jordans, a $200 bottle of liquor at the club that can be bought for $30, and other things that make us “look” rich.

So what is the answer here, Mike? It’s pretty simple: increased financial literacy.

Financial literacy — is the simply the ability to allocate money properly, and being financially educated enough to be self sufficient.

Now will being financial self sufficiency stop racism?

In other words, does having money “price” you out of racism?

Well…

Let me explain it like this: Robert Smith is the founder and chairman of Vista Equity Partners, has a net worth of $4.4 billion, and is the 155th richest person in America. He had a dinner in New York City with a group of senior Wall Street types, including a high-level executive of an investment bank. When Smith moved to pick up the check for dinner, the senior banker stopped him.

“I can’t have a black guy buy me dinner,” he chortled.

Lebron James is the greatest basketball player in the world, made $86 million in 2017, and has a networth of $400 million. And yet he had the “N-word” spray painted on the gate of Los Angeles home. He himself later said,

“No matter how much money you have, no matter how famous you are, no matter how many people admire you, being black in America is tough, and we got a long way to go.”

So to answer your question: no.

Racism is a matter of the heart. Only love, God, and real education can clear the cobwebs of racism that reside in a person’s heart.

But King Solomon (one of the richest kings in history) said a few things about money that are relevant,

“Wisdom is even better when you have money. Both are a benefit as you go through life.Wisdom and money can get you almost anything, but only wisdom can save your life.” (Ecclesiates 7:11–12 NLT)

“…money answereth all things.” (Ecclesiastes 10:19 KJV)

So even though money and financial literacy may not stop racism:

• It helps with having proper legal representation — the kind that can help a person navigate the mindfields of legal jargon and keep our community out of a jail system that profits on us being there.
• It helps with lobbying to protect the rights of under served citizens and give us a greater voice in government.
• It helps with supporting non-profits dedicated to the empowerment of America’s non-whites.
• It helps in being able to fund police that are more apt to promote justice and less apt to discriminate against the people they’re sworn to protect.
• It helps having capital to invest in infrastructure, proper schooling, and entrepreneurship that enriches the community it does business in.
• It helps in combatting credit policies that penalize “certain people” with higher interest.

It also helps with the feelings of inadequacy that come with not being able to maximizing one’s true potential, and being a slave to money. Especially in a land that prides itself on believing in the rights of “life, liberty, and the pursuit of happiness.”

Yup. Solomon was right. Money does answer all things.

But the fact is this: we’re doing more than we’re led to believe.

I’m not sure if you heard the news: Jay Z started a venture capital fund.

The new investment group will be called Marcy Venture Partners. It’s a move that could signal more investment capital for founders of color.

Some people might say,

“That great! Let’s go Hov! I only wish ‘we’ were doing things like that more.”

And if you listen to mainstream media you might think we’re not as financially saavy.

But I disagree.

We’re doing a lot, for instance:

• Nas has a venture capital fund which has made investments in Dropbox, Lyft, and Casper.
• Snoop Dogg launched Casa Verde Capital, a firm focused on early-stage marijuana startups.
• Will Smith joined Andreessen Horowitz and Madrona Venture Partners as an investor in Julep.
• Chamillionaire is now an Entrepreneur-In-Residence at Upfront Capital.
• Ludacris participated in a $10 million Series A round in Roadie, an on-demand package delivery service.
• Kobe Bryant is a partner of Bryant Stibel & Company — a firm that invests in startups.

We’re doing ok, but we need more. We need you.

We need you to be financially literate.

We need you to know the difference between assets and liabilities.

We need you to know the difference between income and cashflow.

We need your help in valuing potential investments.

We need you bringing in greater rates of return with your money. So you can reinvest that back into “us.”

And for those who are doing it big: we need you to teach us what to do.

Believe me when I tell you this: the government is not losing sleep trying to figure out how to empower you economically. Trump is not pacing the floor at night wondering how to bridge this racial-financial divide:

“Melania, please keep it quiet. I’m trying to figure out how to get people out of the hood.”

All we have is each other.

So pick up the Wall Street Journal, reach for a copy of Barron’s, turn on Bloomberg, listen to Squawk box, work to understand this language of money. We need you to understand and be fluent in it.

Let’s embark on this final frontier together.

You down?