In honor of Black History Month 2073
[Essay]
BY JENNY KASSAN
In honor of Black History Month, let’s take a moment to remember U.S. Black history with a focus on economics and finance.
After the Civil War, Blacks were promised reparations, but after Lincoln was assassinated, that promise was rescinded. Until the 1960s, blatantly racist practices in finance were legal and common. For example, during the New Deal, Blacks were excluded from federal backing of home loans by the Federal Housing Administration. Racism in housing finance didn’t become illegal until 1968 with the passage of the Fair Housing Act. Discrimination continued however and in 1974 Congress passed the Equal Credit Opportunity Act which “forbids credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or whether you receive income from a public assistance program.” Even after that, de facto racist practices continued for decades.
When Blacks managed to build wealth in spite of the huge barriers resulting from our racist history, they were vulnerable to violent attack by white mobs. For example, in 1921, white mobs attacked the community of Greenwood (also known as Black Wall Street) in Tulsa, Oklahoma. An estimated 300 people were killed and approximately 35 acres of commercial and residential property were destroyed.
By the early 2020’s, the effects of this history had led to extreme inequality of wealth. At that time, the average per capita wealth of white Americans was $338,093 but only $60,126 for Black Americans. New Black-owned businesses started with almost three times less capital than new white-owned businesses, and Black entrepreneurs’ loan requests were three times less likely to be approved than those of white entrepreneurs.
By the mid ‘20’s, the 250 Years is Enough movement was beginning to grab headlines for its creative civil disobedience actions protesting the extreme injustice of capital flows, with a focus on Wall Street and the venture capital headquarters in the San Francisco Bay Area. The movement demanded reforms to address the increasing concentration of wealth in fewer and fewer hands resulting from the plunder of the nation’s resources which had been enabled by tax and regulatory policy.
In the ’30s, federal and state lawmakers began to respond. Reparations for slavery were finally authorized and the tax system was reformed so that wealth holders now pay a far larger share of taxes than people whose primary source of income is employment.
Perhaps even more impactful was the growing public disgust with Wall Street and the Venture Capital ecosystem. Americans were no longer willing to prop up finance institutions that created far more economic devastation than innovation or economic well-being. A new system for allocating financial capital sprang up (using legal reforms dating back to the JOBS Act of 2012 and subsequent reforms that democratized investing outside of Wall Street) and the vast majority of our country’s wealth shifted from being invested in the global financial casino and tech start ups to businesses in the real economy. Individual Americans chose to invest in the businesses in their own communities and the businesses that made meaningful positive impacts in their lives.
Today, the race of a business owner is no longer a predictor of access to capital. According to a study completed in 2072, the best predictors of a business’ access to capital are (1) the business’ ability to serve a real customer need and (2) the perceived positive impact of the business on its community and on planetary health.
So, why do we still celebrate Black History month? We can never forget our country’s history and the struggles that were needed to reach our current state of greater equality of opportunity and outcome. We must never go back!
