Thursday, August 11 2022

The history of racism, discrimination and violence runs deep. Each time black Americans made advances, it was either legally taken away, such as when the Manhattan Beach, California City Council used eminent domain in the 1920s to take Bruce’s Beach away from a black couple who owned a resort for Blacks operated, or violently, as white mobs burned the middle-class community in Tulsa and dozens of other black communities across the country. The result is that black Americans lag far behind white Americans in every economic statistic.

according to a the average white family has 10 times the wealth of the average black family reportThe Economic Impact of Closing the Wealth Gap‘ by McKinsey & Co., a management consultant. And black Americans can expect to make $1 million less than white Americans in their lifetime. Prosperity Now, a nonprofit advocacy group, said in a report that if nothing is done, the median net worth of black families will be zero by 2053.

However, one of the surprises to me is that there are tried and true solutions, but they are probably not being applied to black America in sufficient numbers to solve the problem. And none of these solutions are likely to solve the problems themselves.

Let’s discuss the pros and cons of improving financial literacy in the black community: the “baby bonds” proposal introduced in Congress, housing programs that would narrow the gap between black and white home ownership, and guaranteed income programs that would… have proven tremendously successful. And, probably the most controversial of all, reparations.

Many people, including economists, financial planners, and educators, both black and white, believe that financial literacy is a tool to bridge the wealth gap. It is vital that we increase financial literacy in the black community.

According to the National Endowment for Financial Education, students who gained financial education at a young age were less likely to take out high-interest loans, such as payday loans, and were less likely to rely on high-interest credit cards.

But economist Andre Perry, a senior fellow at the Brookings Institution, said in a pillar: “Financial literacy courses will not close the racial wealth gap: stop blaming black people for the exploitation that has stolen their wealth for generations.”

He continued, “While teaching good financial habits to high school students is wonderful, to suggest that it would close the racial wealth gap is preposterous. Black people can save every penny they have for the next 250 years and it still wouldn’t close the racial wealth gap in this country.”

There are many who agree with Perry. However, many financial experts still believe that financial literacy is an important part of any major plan.

The idea was first proposed by economists William A. Darity Jr. at Duke University and Darrick Hamilton at the New School for Social Justice. Senator Cory Booker (DN.J.) has proposed legislation that would create a federally funded savings plan for every child born in the United States. Accounts start at $1,000 with an additional deposit of up to $2,000 Annually until the child turns 18, depending on the family income. The child would then have access to the money to buy a house or pay for college tuition. A analysis by financial services firm Morningstar concluded that baby bonds would halve America’s racial wealth gap after the first children reach their 18th birthday.

But despite a dozen co-sponsors in the Senate, including Senate Majority Leader Charles E. Schumer (DN.Y.), and nearly as many co-sponsors in the House of Representatives, the legislation has not progressed. It has no support from Republicans.

California has budgeted a pilot program that would provide grants to organizations to provide participants with a guaranteed poverty reduction income.

Stockton, California, began a pilot program in 2019 under former Mayor Michael B. Tubbs, in which the city gave 125 residents in low-income neighborhoods $500 a month for two years. After the first year, a study will be conducted by independent researchers found that full-time employment increased among recipients the guaranteed income and that their Financial, physical, and emotional health improved.

According to the Urban Institute, the black homeownership rate is 42.3 percent, compared to the white homeownership rate of 72.2 percent. If this is not addressed, the organization says, black homeownership rates will continue to fall by 2040.

A group of housing and civil rights leaders last year announced an initiative to significantly increase black homeownership rates in the country. The Black Homeownership Collaborative, a coalition of more than 100 organizations and individuals, wants to bring black ownership to the level of white homeownership, which would require 5 million additional black homeowners, or a 72 percent increase.

The group aims to create 3 million new black homeowners by 2030 through a 7-Point plan to achieve your goal within nine years: home ownership advice; down payment assistance; Housing; credit and lending; civil and consumer rights; Sustainability of home ownership and marketing and public relations.

The group also called for more funding for housing counseling services and a targeted down payment assistance program.

Darity and Kristen Mullen in their book “From here to equality‘ say that the total amount of reparations should be determined by the amount necessary to close the wealth disparity between black and white Americans. This would require spending $10 to $12 trillion, or $200,000 to $250,000 per eligible recipient, annually over 10 years. That would, they say, balance black family wealth with white family wealth.

And the House Judiciary Committee voted HR 40, a reparations bill, out of committee in early 2021. This bill was originally introduced in 1989 by the late Rep. John Conyers Jr. (D-Mich.) -sponsors and over 20 Senate co-sponsors for a national redress bill.

However, a passage is unlikely. The legislation is firmly opposed by Senate Republicans. That’s according to a nationwide survey by the University of Massachusetts Amherst and the WCVB 62 percent of those surveyed rejected reparations to descendants of enslaved people. A Reuters poll found that only 20 percent of respondents supported reparations.

I hope that parts of each program will be implemented in the next few years. Much more is happening with reparations at the local level. We saw communities like Asheville, NC, and Evanston, Illinois Passing reparations bills at the height of the social justice movement during the pandemic. And 11 US mayors, including the mayors of Los Angeles and Denver, agreed to pay reparations to small groups of black residents in their cities. The programs were intended to right past wrongs, but the mayors gave no details on how much the programs will cost or how recipients will be selected.

Roger Ferguson, former CEO of TIAA, the financial services giant, probably put it best: “None of these things is a silver bullet or a magic wand. And the reason I don’t think there is a silver bullet is because it took us literally hundreds of years to get to this place and hopefully I don’t think it’s going to take 100 years to fix it, but I think it will take time to undo three centuries of damage.”

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