Crisis in Education — April 2014

Articles | Posted by Jim Clingman April 18th, 2014

We may as well call it “Edu-pay-tion,” as far as many prospective students are concerned. The cost of a college degree has risen 1120% since 1978, but wages have increased a mere 6% during that same period. The national collective college debt is more than $1 trillion! We have college grads mired in $29,000 of debt, on average, while they are looking for jobs that do not exist. Parents and grandparents of those grads are also saddled with much of that debt, which is immune to bankruptcy, and they will have to make the payments until they die.
TrillionWhat have we gotten ourselves into? The greed that accompanied those easy-to-obtain, just-sign-here college tuition loans, borders on immoral. Financial institutions were like Black Friday crowds, trampling one another to get in on the act. New lending operations cropped up every day, and new proprietary colleges and universities opened their doors throughout the nation, advertising their degrees and easy to get loans for tuition. What would happen if students and parents just stop paying on that $1 trillion debt? Who would pay then? Bingo! I can see another bailout coming, and this time it will be for student loans.

Ethical implications exist on both sides—the lenders and the borrowers, but no matter what side you take the problem is still here and is looming as yet another bubble about to burst in the near future. As many schools are raising their tuition costs, despite the ominous specter of a meltdown, many prospective students are opting out of their plans to attend college. But where does that leave them in today’s “jobless market”? Sounds like a catch-22.

This nation trails many other countries in various fields of education, and we will find ourselves even further behind if this tuition bubble is not deflated very soon. Our young people will not be able to compete on a national level, much less on an international level, without access to adequate, relevant, and higher educational experiences. In other words, the famous mantra, “Leave no child behind” will soon become, “Help every child catch up.”

We have smart bombs and dumb children. We have the ability to kill people with drones without even seeing them, but we cannot—or will not—provide adequate education for our children whom we see every day. We have spent trillions destroying and rebuilding Iraq and Afghanistan, but a relative meager amount to secure the future of our own youth. Now we are sending money to Ukraine, along with all the other places to which our dollars flow, while our young people slip further down the education scale. Our priorities are all screwed up.

This is not to say that money alone will solve all of our education problems, but more of it, pointed in the right direction, sure would make a positive difference in our current educational crisis—and that’s exactly what it is. Simply throwing money at a problem only results in it being caught by folks for whom it is not meant. The students are at the bottom of the food chain and see little or no benefit from money meant to help them.HBCUgards3

Meanwhile, as we teach our children how to take tests rather than how to use their critical and analytical thinking skills, we are doing them a gross disservice. And similar to what we saw with the sub-prime housing debacle, if we continue to make financial institutions even wealthier by allowing them to make outlandish loans to college students who cannot afford to repay them, we will soon have another piper to pay.

So what do we do? Prospective students should start looking at less expensive alternatives to attain their college degrees. For instance, go to a local school and live at home (I know that’s a tough one, but it beats having to go back to live with your parents when you graduate); stop treating your student loan like it’s a free monthly check that you can use to buy everything but educational necessities; and, here’s a novel idea: work while you are in college. It may not be the most glamorous job, but if it helps pay your tuition and keep you out of thousands in debt, that’s a good thing. College debt2

Government and financial institutions worked so well when it came to the bailouts. Banks were too big to fail and had to be helped with $780 billion or so. Aren’t our children too important to fail? Maybe they are not; at least not in this country, huh? Anyway, if they care to listen, banks, proprietary schools, and government officials should get together and stop the madness that has led to $1 trillion in student loan debt while graduates cannot get commensurate employment and cannot compete in a global society.
Tuition graph2
We have to stop education from turning into “Educ-pay-tion.”College Debt

 

 

Where do we stand? – April 2014

Articles | Posted by Jim Clingman April 11th, 2014

ChakaChaka Khan sang, “Tell me somethin’ good.” The 2014 National Urban League (NUL) report, State of Black America, “One Nation Underemployed; Jobs Rebuild America,” contains a lot of great information, but it will only prove to be “good” if we use it to build a solid and long lasting economic base. The 236 page report is full of statistics and insights Black people need to know—and act upon. Knowledge is only power if we use it.

For the most part, Black people in this country are at the bottom of every good category and at the top of every bad one. Of course most of us don’t need the NUL or anyone else to tell us that; we see it every day all around us, but supporting statistics are a great way to drive the point home. Sad to say, our overall “state” is not good. (Sorry, Chaka)

I would love to see a report on the “Fate” of Black America. Maybe that would wake us up and get us involved in changing our “state.” Reports on our “state” are nice but they usually tell us what we already know. Acknowledging and discussing our fate might scare us into implementing long term, solution-based, and work related approaches to our challenges.

I was intrigued by some of the responses to our “state” from Black folks. For instance, an article titled, NUL State Of Black America 2014 Report Says Minorities Losing Economic Ground, by Jesse Holland, states, “Despite the ‘dismal’ numbers an analysis by the Associated Press-NORC Center for Public Affairs Research found African-Americans significantly more ‘optimistic’ about their future standard of living than whites…” Mr. Holland went on to write, “The survey found high optimism even among Blacks who say racism is a cause for economic inequality.” My reaction was, “Say what?”

Another irony in the NUL report referred to the new “Chocolate City,” Memphis, TN., which is 63% Black, according the 2010 U.S Census (The NUL report says 46%), yet ranks the “most equal for ‘Hispanics’ in unemployment equality” (3.8%), compared with a 6.5% unemployment rate for whites.” The unemployment rate for Blacks in Memphis is 16.6%. What’s wrong with that picture?

While optimism is commendable, it is irrational for us to be complacent and continue responding to old problems with the same failed measures of the past. We should know by now what relying on hope and optimism brings. MLK’s words, “Why we can’t wait,” and the “Fierce urgency of now” ring true. Do we just recite his words, or do we act upon them? As I wrote in a previous article, “Just how long is ‘now’?”

It’s been 46 years since King died in Memphis, fighting for economic rights; according to an article on nashvillescene.com, Memphis is “Among worst the U.S. cities to be Black, male, and unemployed.” The city just spent $28 million to revamp the civil rights museum; I wonder how many jobs were created for Black men on that project, and how much of the $28 million went to Black contractors. Did Blacks in Memphis settle for symbolism over substance, or did they get both?

Information on the State of Black America is great, but if we don’t change our inappropriate behavior we will continue to be distracted from the real solutions to our problems. Heck, Tavis Smiley televised the revolution for several years. What did we do with that? I am worn out by our tepid and sometimes total lack of response to the problems we face in this nation.

It’s frustrating to see Black people settling for a nebulous request for “jobs” and an increase in the minimum wage to $10.10. We do need more jobs, but we must create some of those jobs ourselves, and be able to hire a significant percentage of our own workforce. A decade ago, Economist, Thomas Boston proposed his “20 by 10” concept that called for 10% of Black workers being hired by Black businesses by 2010. We missed that boat, so maybe Professor Boston should now call for a “10 by 20” effort.

We must raise our level of entrepreneurship by including it in our schools’ curricula, and by growing our businesses via mutual support and strategic alliances. The NUL report states, “We must recognize…entrepreneurship as the most important vehicle of economic development in the Black community.” Amen!

Our “high optimism” alone will not take us to the promise land of “economic equality.” Complacent optimism makes us feel good in our misery; pragmatism makes us work to “do good” and do well at the same time.

MayfieldEn VogueCurtis Mayfield wrote it, and EnVogue sang, “Giving him something he can feel.” Great song, but it’s better when coupled with the IsleysIsley Brothers’ classic, “I got work to do.” Let’s move, as the Temptations sang, from “Standing on shaky ground” to “Standing on the top.” TempsTemps2

 

 

Black Capitalism – Fulfillment or Failure? – April 2014

Articles | Posted by Jim Clingman April 4th, 2014

In light of what most of us know about the economy and where Black people fit, mostly as consumers rather than producers, a discussion of Black Capitalism is in order. The term was promoted by stokely2Stokley Carmichael in 1966 as part of the “Black Power” movement, but came into vogue in 1968 when the Nixon administration adopted it from a proposal by Robert Kennedy. Black Capitalism originally called for loan assistance, credit guarantees, and technical assistance for Black owned businesses in an effort to stimulate economic development in the ghettos.

Black Entrepreneurship in America, by Shelly Green and Paul Pryde, cites, “[Black capitalism] constituted a movement by Blacks to gain control over the business development of their own communities…Directing business growth in the Black community was considered the first step toward achieving a powerful Black economic presence in the larger American economy. [It] called for a new kind of social contract among racial groups in America—one based on mutual self-interest rather than integration.”

BrimmerAndrew Brimmer, noted economist and Lyndon Johnson appointee to the Federal Reserve Board, had a different perspective on Black Capitalism. In the book, A Different Vision: African American Economic Thought, edited by Economist, Thomas Boston, Brimmer wrote, “…the strategy of Black capitalism offers a very limited potential for economic advancement for the majority of the Black population.”

In support of his contention, Brimmer posited, “The ghetto economy…does not appear to provide profitable opportunities for large scale business investment.” He noted a large part of the problem was due to “a tendency for affluent Blacks to shop in the more diverse national economy.”

Brimmer suggested that Black Capitalism fails because it is founded on the premise of self-employment, as opposed to employment in salaried positions where the rewards are greater and the risks are much lower. (That reality gives credence to Thomas Boston’s “20 by 10” strategy of Black businesses hiring Black employees.) Brimmer suggested that Black Capitalism “may retard Blacks’ economic advancement by discouraging many from the full participation in the national economy…” His position assumed that corporations would hire Blacks; but his concern about the greatest risk being placed on those who can least afford to take risks is quite valid. We have several examples of that reality in Black businesses today.

Has Black Capitalism worked? Is it working? One thing is certain: Korean Capitalism is working. They control the Black hair care market via their stores in the ghettos, where Black folks are their only customers; and Koreans hire their own people as well. This is a great example of how “segmented” capitalism can and does work.

Economist, Milton Friedman said, “History suggests only that capitalism is a necessary condition for political freedom [since many nations can be identified that have] economic arrangements that are fundamentally capitalist and political arrangements that are not free.”

History Professor, Dr. Juliet E.K. Walker, wrote, “The existence of Black entrepreneurship… provides an example of an economic arrangement in this nation’s antebellum free enterprise system that was fundamentally capitalistic, but within which some of the capitalists, the African Americans, were not fundamentally free.”

The problem with Black Capitalism is structural inequity due to a paucity of government support. Just as the government has subsidized large corporations, it should do the same for Black businesses. The International Journal of Humanities and Social Science (November 2012) carried a paper written by Ryan Very, titled, Black Capitalism: An Economic Program for the Black American Ghetto, in which Mr. Very made a good case for government support of Black Capitalism.

Here is the Abstract from that paper: “The American federal government supported the creation and expansion of economically depressed urban residential areas where blacks live in segregation from whites. These ghettos face barriers to economic development including high unemployment, a low wage labor market, capital drain, and market dualism. Three popular ghetto economic development strategies are ghetto dispersal, corporate branch planting, and black capitalism. Black capitalism breaks the ghetto’s economic barriers better than ghetto dispersal and corporate branch planting, but it will only be possible with significant support from whites and the federal government.” In other words, the government caused the problem, and the government should fix it.

Mr. Very continued, “Black access to capital coupled with subsidized entrepreneurial training services would…allow more residents to start their own potentially successful businesses in the ghetto. With a sizeable government subsidy, ghetto residents could even build manufacturing plants. If ghetto residents would export enough manufactured goods, both the drain of capital and the (neighborhood) trade deficit would decrease.”

Until Blacks understand our economic and political positions in this country, we will continue to languish in what Dr. Ron Daniels calls, the “Dark Ghettos” of either or, and we will never move to the land of both and.

 

 

The Cost of Getting Old — March 2014

Articles | Posted by Jim Clingman April 1st, 2014

We are at a critical stage in the economy when “more than one-third of workers (36%) have a measly $1,000 saved for their later years,” according to a study by the Employee Benefit Research Institute. “Compare that to the 28% of workers who said they had $1,000 saved in last year’s survey, and the picture gets a little more grim,” the article continued. The report refers to all workers; that 36% likely skyrockets when applied to Black people. You know what happens when America gets a cold—we get pneumonia.
old man
With baby boomers at the head of the mortality line, all we can do now is reflect on the financial “what ifs” in our lives and try to figure out how to live with a $1,000.00 or less in the bank. The millennial generation had better pay close attention to their finances and start saving as early as possible to keep from making the same money mistakes their parents and grandparents made.
old woman
First and foremost, be very careful with those student loans. Leaving school with a debt of tens of thousands of dollars, even before you get a job, is a prescription for financial disaster. I know the money is great to have, especially what some of you call your “monthly check,” which is in excess of what your tuition requires. But you will have to pay it back no matter what, with interest of course. Imagine trying to find and keep a job, a car, a place to live, and food to eat, while having to pay a monthly note of $400-$600 for a student loan for the next twenty or thirty years! When you get old you may also end up in the group with less than $1000.00 saved for retirement.

Keep in mind that a college education, while it is very important and necessary in this economy, is not worth what it used to be. Thus, it would be prudent to forego that high-priced school you want to attend and consider a smaller community college, a tech school, or an HBCU. Unless you get a scholarship that covers most or all of your costs, a smaller less expensive school is the way to go.

I know most young people refuse to acknowledge it, but if you keep living you will get old. Question is: “What will getting old cost you?” In today’s economy getting old is very expensive. And who knows what will happen to Social Security and Medicare? The way things are going now, young people will be pretty much on their own when they get old, so it’s best to get a Roth IRA started now, or at least some kind of saving plan that will multiply and be there at retirement. (A few dollars saved each month now will multiply into hundreds of thousands or even a million dollars by the time you reach retirement age.) Don’t put all your eggs in one basket by simply depending on your employer’s contribution to your 401-K and insurance plan. Unless you “own” the job you have, it can be taken away from you at any time, along with your retirement plan and your insurance policy.

Understand, young people, that if a young athlete or entertainer can go broke after making unwise decisions with his or her millions of dollars, your $80,000 per year will evaporate at a much faster pace, especially if you try to live like they live. Be smart, learn from the mistakes of others, and understand that you do not have to end up like the current 36% in this country.

The other caveat for young people as they prepare for their retirement is the dreaded conspicuous consumption syndrome. In an article I wrote some years ago, titled, “Supply and Demand,” I noted that Black folks demand and others supply us with their goods and services. Anything someone makes we will buy it, no matter how much it costs. Just look at Nick Young of the L. A. Lakers who recently had his home burglarized of a pair of $6,000.00 shoes called “Nike Air Yeezy 2.” Yeezy That reminded me of basketball star, Antoine Walker, getting robbed of a $55,000.00 watch.

A great article on this subject is featured on The Root website, written by Demetria L. Lucas, titled, “Fronting: We Need to Stop Living the ‘Fabulous and Broke’ Lifestyle. It’s time to put the ‘fake it till you make it’ philosophy out to pasture. She wrote, “My wake-up call came…when my friend called me in a panic, not knowing what to do. He was around $30,000 in credit card debt and had student loans. That friend ended up moving back in with his parents for a year-plus so he could save money to pay off his credit cards. (More than 10 years later, he’s still paying off student loans.)”

The cost of getting old is high—be prepared.