In May the NAACP announced that Cornell Brooks, a 53-year old lawyer, minister and civil rights activist, would become its 18th president. Somehow, that news did not cause a ripple on the Dow Jones industrial average, the Nasdaq or the Standard & Poor’s 500 index.
Imagine Wall Street’s reaction if the NAACP had announced a new program that offered the financial-services industry a slice of a $12 trillion opportunity. That just might be enough to get the Street to pay attention—and that kind of attention just might make Cornell Brooks’ presidency matter.
According to one estimate, the lifetime cost to society of one high-risk youth who goes from juvenile detention to a juvenile correction facility to an adult prison is $3.8 million, while the lifetime tax contribution of that same youth if he goes from a high-quality after-school program to a publicly funded university for four years is $1 million. Combining the potential cost savings and tax payments, that’s a total contribution of $4.8 million per youth. Multiply that by the more than 2.4 million Americans who are incarcerated at this moment and you have a potential economic swing of nearly $12 trillion.
That’s an arbitrage opportunity for Wall Street. The same creativity that the Street used to invent collateralized debt obligations in the subprime mortgage frenzy could be channeled to developing financial instruments tied to the dollar benefits inherent in getting children into college instead of into prison.
I know it’s wildly counterintuitive to suggest any kind of link between black America and Wall Street. It’s as if they exist in nonintersecting universes: a black one dedicated to freedom, justice and rights, and a Wall Street one preoccupied with stocks, bonds and commodities.
But the absence of a meaningful connection between black Americans and Wall Street is a problem and perhaps an opportunity. The problem: Black America’s irrelevance to the financial-services industry makes it impossible to use the industry’s virtually unlimited political and economic power to our advantage. The opportunity: to reinvigorate our struggle for full participation in American society by finding a way to align at least some of our major interests with the Street’s singular and unwavering focus on making money.
As we grapple with racism in its 21st-century form, we need 21st-century tactics to combat it. In this century, harnessing the power of the market and the financial-services industry that shapes and dominates it, should be a powerful weapon in a new arsenal of civil rights and economic-empowerment strategies.
The Street exerts a commanding influence over both Democratic and Republican politicians. Bill Clinton’s treasury secretary, Robert Rubin, worked for Goldman Sachs prior to joining the administration and for Citigroup after leaving it. George Bush’s treasury secretary, Hank Paulson, was the former chairman of Goldman Sachs. Barack Obama’s treasury secretary, Jacob Lew, is a former chief operating officer at Citigroup. Republicans listen to oil and gas interests, Democrats to Hollywood, but both parties pay attention when Wall Street speaks.
And when Wall Street speaks, it’s always talking about one thing—money. Wall Street exists to make money. Its success at that is the source of its almost unlimited political power. And it is amoral—it does not care whether the things it does to make money are good for the greater society or whether it creates a once-in-a-generation catastrophe like the Great Recession.
If black America can link even a small part of its agenda to the Street’s self-interest, it could open a new front in our battle for a firmer foothold in the American mainstream.
Aligning a financial behemoth that has no moral compass with a liberation struggle grounded in moral rights and wrongs is tricky at best. But if black America can link even a small part of its agenda to the Street’s self-interest, it could open a new front in our battle for a firmer foothold in the American mainstream. So, baldly, my question is: Is there a way for Wall Street to make money—lots of money—on real progress for black Americans?
There are good reasons to believe the answer is yes. From the perspectives of local, state and federal governments, it’s significantly cheaper to invest in the early education and child care that keep children out of the traps of crime, teen pregnancy and dropping out of high school than it is to pay the downstream costs of incarceration, welfare and dependency.
But our political system is unable to grasp the opportunity to lower those downstream costs. In part, that’s because those costs are income to politically powerful entities—prison companies and their employees, local law-enforcement agencies and others. And, in part, it’s because so many local and state legislatures, and half of Congress, are controlled by a Republican Party that is actively hostile to the interests of black Americans.
Wall Street, however, can do what the political system can’t. It can invent financial instruments that enable it to profit from the difference between what governments plan to spend on incarceration, welfare and dependency, and what they’d actually spend if hundreds of thousands of young people went to college instead of prison.
What Wall Street wants, Wall Street gets. The challenge for Cornell Brooks, the NAACP and everyone else interested in progress for black Americans is to make Wall Street want what’s good for us.
Harold J. Logan, publisher of Third Set Perspectives, is a businessman, writer and social entrepreneur based in Miami.