CHAPTER ONE

Separate, Unequal America

I am aiming to turn upside down some “truths” about the economy, jobs, where wealth comes from, and who stands to gain the most if we tap the armies of ignored and “inconvenient” poor and working poor who are presently left on the sidelines. We have some big problems and challenges to address, but despite what we might hear on the evening news, the United States remains the largest economy in the world, at approximately $16 trillion in annual gross domestic product. ¹ Our best years are not behind us. We have enormous human resources of wealth creation and opportunity just waiting to be unleashed.

The future of our economic story fully depends on overturning these powerful myths about how the economy works for the rich, the poor, the middle class, and everyone in between. We are all called to leave our comfortable assumptions and to arrest the crumbling of the American dream that built this country in the first place.

For instance, consumers—not businesses or governments—power the bulk of our massive economy, with fully 70 percent of the economy dependent on consumer spending. ² This means that you and I are driving the largest economy in the world, by purchasing everything from iced cappuccinos to ice shovels, from gas to put in our cars to the cars themselves. Sustained economic growth and the fortunes of the other 30 percent of the economy represented by businesses and governments, therefore, depends on the economic vibrancy of ordinary consumers, most of whom are not wealthy.

Even so, these ordinary Americans are much more reliable spenders than the wealthy; the bottom 80 percent of the American workforce spends 90 percent of its income, whereas the wealthiest 1 percent spends only 49 percent. ³ The average American cannot afford not to spend the bulk of his or her paycheck on the basic necessities of living, but the rich simply make too much to spend it all. Ordinary Americans are the coal that feeds our economic locomotive, and if Wall Street, banks, and large corporations are going to make their numbers and increase their wealth, they need this segment of the economy to become more economically strong and stable. This invariably means expanding opportunity through well-paying jobs and small businesses, along with financial inclusion and know-how.

But the “bottom” 80 percent of consumers, the backbone of the economy, owns only 11 percent of the nation’s money. ⁴ We’re now building the consumer-driven 70 percent of our economic growth on the backs of those who have only a 7 percent stake in the system, and as many as ten million of these consumer households don’t even have a bank account. ⁵ When the poor, the underserved, and the struggling middle class start feeling uneasy about the future, or when they are out of work or out of money, they stop spending on consumer products. And when they stop doing this, everything else stops as well.

The people driving our economy get little regard, less respect, and almost no consideration for doing so. Although the system works well for some, it is leaving many behind, and as a result it is understandably coming to an end.

What might happen if we instead place faith and confidence in and support those who can actually lift our economy—who already do, through their consumer spending alone? Just imagine if we viewed the poor as something other than a tool to be used, taken advantage of, and taken for granted. What if we actually valued the poor? After all, the rich need the poor, if for no other reason than to remain rich themselves.

Helping the Poor to Transform America

We must value the poor and, through them, transform America. As Dr. King said in his 1964 Nobel lecture, “No individual or nation can be great if it does not have a concern for ‘the least of these.’” Dr. King was referring to Matthew 25:40, where Jesus said, “Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.” I believe Dr. King was both morally correct and economically profound.

We don’t have to settle for capitalism the way we have it, or the way it’s been. We can refashion and reimagine capitalism as we would have it, and then do something other than complain about it. We can finally make free enterprise and capitalism actually work for the poor, the struggling classes, and the least of God’s children. The world has never tried it at scale, but this is precisely my plan. In this plan, everyone gets a role to play, not just the president and other elected officials, big business, or big banks. This is our country, our world, and our communities, and if change is to come, we must drive that change.

Reimagining the Poor

So the first myth that we need to overturn is the idea that poor people are somehow not relevant to our economic growth. The second myth is that the poor somehow did this to themselves—that they are all bums and deserve to be poor because they’re lazy, have bad habits, or possess a horrible work ethic. Our logic then follows: “Why should I help someone who deserves what they got?” That would make perfect sense, if it were true.

Even I used to think this way. Growing up black in the inner city, in a diverse neighborhood of striving and struggling families, attending public school, I had to find a way to deal with all the dynamics that came my way on a daily basis, to deal with difficult people, and to negotiate myself out of almost any tough situation. I was never the biggest kid, or the toughest, and, unlike the rich of this nation, I could not build the equivalent of a gate around my existence, so I had to try to be the smartest kid. One of the ways I dealt with what I saw, then, was through rationalization. I thought I understood poverty. I convinced myself that the poor people I saw were all bums and I had a dozen reasons to be against them. I now know I was wrong, and I also know that to rationalize is to tell rational lies. I was only fooling myself. And this is the worst deceit.

What I didn’t understand was all the external factors that helped me to avoid becoming one of “them.” I had a mother who told me she loved me and a father who was the role model I needed to see in business. I had a banker come into my classroom when I was nine years old and unpack the mysterious world of free enterprise and capitalism, explaining to me the “language of money,” financial literacy. I was so totally focused on dreams and was so hopeful about my future that I seldom noticed the actual causes of all the drama and mayhem that surrounded me on a daily basis—lack of financial literacy, lack of access to banking and credit, lack of real estate ownership, lack of role models and opportunity. Lack of self-esteem.

I didn’t get out because I was the brightest or most talented kid on my block. I knew plenty of brighter, more talented kids who ended up on an economic dead end or even just plain dead. I got out and did well because of the hope factor that surrounded and encompassed my life. But when this magic doesn’t happen in a kid’s life, and when the factors that actually drain opportunity happen often enough, then kids begin to lose hope. And the most dangerous person in the world is a person with no hope.

When enough people are deprived of hope often enough and for long enough periods of time, then a community’s culture itself gets hijacked. Hijacked by thugs and thug culture. Hijacked by all the elements and the operators who seize on and even live on that loss of hope. Over time, people, cultures, and communities respond internally to how they are treated externally. Tell someone they aren’t valuable or important and, in time, far too many of them begin to believe it.

Recreating a Pathway to the Middle Class

A poverty of hope cannot be solved with a nice apartment, a new car, or even a new school building in a neighborhood. This problem has to be attacked from all sides to prevent a self-perpetuating cycle in which the very poverty of the poor seems to justify the poverty itself, in which we come to think of the poor as noncontributing members of society who somehow did it to themselves.

In order to do this, we need to recapture that old hope that if you work hard, keep your nose clean, go to school and get good grades, pay your taxes and your emotional dues, it will pay off in a fair shot at the American dream and your children will have a legitimate shot at living an even better life than you. Today, both of these dreams seem to be shattered, not for just the poor and the underserved but also for the struggling middle class. Today, the bet seems to be off, or even lost, and the crisis that is spreading now is really more of a loss of confidence than a loss of net worth or home equity.

People don’t mind taking risks and losing a little, maybe even a lot, as long as they believe there is still a legitimate shot at the dream. People don’t mind that the lucky, fortunate, and hard-working get rich, because to be blunt and honest, they all want to be rich too. The problem arises when people begin to believe that the game is rigged, that no matter what they do they simply cannot get ahead. That is when a healthy skepticism turns into a destructive cynicism.

There are increasingly few or no clear pathways to the middle class, but unfortunately, most unaffected people do not care. Poverty was not debated or even substantially spoken about in the most recent presidential election. It is out of vogue to discuss the poor, much less to be poor. And even among those who want to help, the answer is all too often, “I would love to help, as long as the solution doesn’t increase my taxes, cause me inconvenience, or happen in my backyard.”

But we should all care, because the fate of the poor is the fate of us all.

Consider Detroit, Michigan, which recently filed for bankruptcy. Fifty years ago Detroit was an economic hub, a center of culture and manufacturing jobs, home of some of the largest industries, companies, and employers in the world, supplying American-made automobiles to a burgeoning American middle class. Stable jobs, good wages, and benefits fueled a thriving middle class, and families and neighborhoods flourished. Back then, Detroit was the fourth-largest city in the nation, with more than two million residents, and boasted the largest per capita income in America.

Today, the entire automobile industry is a shell of its former self, and after decades of decay and retreat, the population of Detroit has declined to about seven hundred thousand and the unemployment rate stands at more than 18 percent. Those stable, high-paying jobs have been replaced by technology and global competition, resulting in a complete collapse of the economy.

This wasn’t the fault of the workers. Instead, Detroit’s leaders lost sight of that story line, and a city about the many, which found a magical way to ride a wave up, increasingly became a city about the few, where everyone concerned rode the original dream into a deep fiscal ditch. The leaders forgot about the struggling class that made the city in the first place. Detroit made things and Detroit remade things but Detroit didn’t reimagine things as they could be, rather than just the way things happen to be today.

For instance, the original mission, vision, and purpose of the trade unions in Detroit was workers standing together to protect themselves and ensure a decent standard of living. But today most people in Detroit could not actually tell you what that original mission was. Instead, the unions began to see their role as simply guaranteeing jobs, raises, and benefits, to the point that worker health insurance is today one of the largest expenses for a Detroit car manufacturer. General Motors planned to spend more than $60 billion on employee health insurance, an average of $1,400 per automobile coming off the line. ⁶ Its biggest expenditure would thus be employee benefits, not a new-technology engine that runs on alternative fuel or a newly designed emissions system to reduce carbon dioxide levels.

Detroit went broke long before it went bust; it ran out of ideas. This isn’t the fault of the poor, but this is one of the reasons the poor stay poor, and it is one of the reasons that Detroit became the largest municipal bankruptcy case in American history.

Or consider Chicago, a city on the bubble and simultaneously at a radical hundred-year tipping point. It could go either way—it could become a model for breakthrough transformation of cities or it could crater. Chicago is an economic engine of the Midwest, home to countless Fortune 1,000 companies, yet Chicago is today a tale of two cities. There is the posh Chicago, which is a national tourist mecca, and the other Chicago, which locals call “Chi-raq”—a locked-down, suffocating war zone where forty-five young people from urban, low-wealth communities were shot or stabbed in one weekend. ⁷

Chicago’s leadership is understandably throwing everything it can at the problem, from increased law enforcement to stronger sentencing to traditional summer youth employment options. In other words, their solutions are both reactionary and visionary, both fear-based and aspiration-based. But the current crop of aspirational incentives is not very aspirational. Instead, they are merely functional. And that’s a problem.

No powerful trade union or law enforcement agency can keep a city’s economy alive by itself. Likewise, cities don’t thrive because of law enforcement, although civilized society requires both. Cities thrive when there is a high level of individual economic energy and at least the perception of enough opportunity to go around. And all of this is about one thing: hope made real through a pathway to the middle class. This requires an allowance and an opportunity for everyone to become a stakeholder in that city’s dream. Not a creditor to the dream, not a supplicant, usurper, or bottom fisher to the dream, but a stakeholder, a participant, a partner in that dream. It’s not what we get but what we have to give that matters most.

If we want to save America, we must save its cities, and the only way to save America’s cities is with a vibrant and believable pathway to the middle-class American dream. Middle-class people and families don’t want war or strife, they want to go shopping! Actually, they just want economic opportunity. The best stabilizer of societies, here and around the world, is not twenty-year-olds armed with AK-47 assault rifles but ten-and fifteen-year-olds armed with hope, economic energy, opportunity, and a dream of a life better than their parents. Currently, the economic energies of the poor are neglected or wasted. They’re outside the system.

Teaching the Language of Money

It’s time for a rebirth of America, in America, by America. It’s time for us to reimagine everything. Currently, we are comfortable helping the poor with philanthropy, government assistance, or microfinance, but these solutions are all inadequate. The poor don’t just need “help”; they need investment. They need to be treated as customers and job creators. The main driver of freedom in the world today is not the vote but access to capital and knowledge about how to use it (self-determination). That means financial literacy education, financial capability, and financial and economic empowerment. If people don’t understand the global language of money, and if they don’t have a bank or credit union account, they are simply an economic slave. Thus, access to finance and financial literacy is a new civil rights issue.

I have gotten to this point of my life precisely because of the rights restored to me from and through the original civil rights movement here in America. I was able to dream big dreams as a child because of the struggle, sacrifices, and investment made by my mother, my father, my uncles and aunts, my grandparents and great-grandparents, and others. I had great role models. But this history and these people could not completely help me to get to the place I wanted to go next, the place where the poor, the underserved, and the struggling classes need to go next.

The poor and the underserved have never gotten a memo, a manual, or any education in free enterprise and responsible capitalism. Poor neighborhoods and communities simply make the rules up as they go. It’s not surprising that these communities have fallen behind; the amazing part is that they have done a pretty impressive job of this thing with no help, almost no guidance, and zero role modeling of real wealth creation. Unfortunately, the vast majority of these economic shortcuts implode in time.

My father, the businessman that I modeled most growing up, got up early every day, worked all day, often six days a week, got home late. He also employed other people and was the very definition of “hard work.” At one point he owned a small business, a gas station, an eight-unit apartment building, even our home.

He also ran a concrete contracting company, laying drive-ways and building the most beautiful brick walls. But he had a unique way of bidding jobs. He just underbid whoever was there right before him, which meant that while my father got the most jobs, he also lost the most money. For every dollar he made he spent roughly $1.50, which meant that the more money he made the more broke our family became.

After fifty-five years of running a business this way, my dad ended his amazing career dead broke. After a career of hard work, saving, and sacrifice, he lost everything. He knew all about hard work but he had learned almost nothing about the language of money, financial literacy. And not only did we lose everything but also our family fell apart. My mom and dad divorced; my brother never got to go to college. My dad made a series of bad financial moves, which in time and like dominoes ultimately derailed all of our life aspirations. But this wasn’t entirely his fault.

This is only one, personal example. There are countless stories of the once poor and now famous rap star or the professional athlete with a multimillion-dollar contract. These superstars earn the money, but when it comes to figuring out what to do with it, they are winging it. And winging it, with a one-shot opportunity at that kind of money, generally works out very badly. Sixty percent of NBA players and an alarming 78 percent of NFL players will file for bankruptcy within five years of retirement. ⁸

Or look at the guys who sell drugs and eventually find that their only real assets include a cool wardrobe, a hot car (with horrible financing attached), and a roll of dollar bills burning a hole in their pockets. They don’t own real estate, they have no savings, and in most cases, they don’t even have a bank account. They’re essentially living an expensive, high-gloss version of hand to mouth.

When young people are not given financial education, and when schools don’t seem to connect the power of education with the power of aspiration, those young people understandably start looking for shortcuts to financial success. And when such shortcuts are modeled on the high-profile shortcuts people see on TV or the things they see in their communities, they are likely to be headed for the strongest and most painful failure. None of this stuff works in the long term. It just feels good in the moment. It is the very definition of winning battles and losing wars.

This ripples outward in a self-perpetuating cycle. Many American communities exhibit this short-term, get-it-now, looks-like-success-so-it-must-be-so version of winging it, at scale. Add a thugged-out culture that is increasingly dropping out of school and simultaneously losing hope and you have a prescription for an American societal crisis within twenty years.

It is simply not sustainable, and all of it feeds and feeds on hopelessness. What we need now is a reset, and a new business plan based on real financial literacy.

The Freedom of Self-Determination

But financial literacy, access to credit and banking, is not enough without opportunity. In the twentieth century, the definition of freedom was tied to what was going on in the wider world—a handful of defining movements toward emerging democracies, led by leaders such as Michael Collins in Ireland, Mahatma Gandhi in India, and the late Nelson Mandela in South Africa. The United States, of course, has been blessed with leaders such as Julian Bond, Amelia Boynton, Medgar Evers, Marian Wright Edelman, Dr. Dorothy I. Height, the Reverend Leon H. Sullivan, Dr. King, Congressman John Lewis, A. Philip Randolph, the Reverend C. T. Vivian, Andrew Young, and Whitney Young, leading a homegrown civil rights movement.

In each of these places, the primary issue was race, the color line, and social strife, and the cure was almost always democracy and the right to vote, which in turn ultimately triggered real changes in public leadership, important laws, and the public policy governing fundamental issues of fairness and fair play. Looking back on the twentieth century, I think it is fair to say that democracy indeed won this fight.

Democracy continues to fight the good fight in parts of the world that are not yet free to vote, dream, or create on their own. But the issues faced today in much of the world are different. Today, the new definition of freedom is self-determination.

I was recently a passenger in a Washington, DC, car service owned and operated by a Pakistani-born man who had immigrated to the United States, quickly building a family and an entirely new life. When I asked him why he had come to the United States, risking so much to get here, leaving behind his life and family back at home, his answer was one word: freedom. Then I asked why he had picked this particular business, which was probably not going to make him rich and in which, like my father, he worked long hours, sometimes weekends, often holidays. Again, the answer was simple, instantaneous, and one word: freedom.

This man did not come to America to get rich; he came here for a feeling. He was running his own small business—the heart of the American dream—to make a living, yes, but more importantly, so that he could do as he liked, when he liked, however he liked. He could choose who entered his car as a client, who stayed, and even who came back. He had an option to take one vacation with his family in a year or to work a few more days in a month and take two vacations in that same year.

He enjoyed a number of other benefits, too. He could send his child to public school in a free nation or he could work a little harder and send that same child to private school. Later he might choose to send them to a college or university. He was not focused on growing his business a given percent per annum, accumulating a certain amount of wealth in his bank account, or attaining a particular quantifiable return on equity. Instead, he was focused on living his version of the American dream—a life that is self-determined.

This sense of self-determination begins with financial dignity. We must move from a legacy of civil rights justice for a few to what I call “silver rights” empowerment for all. Ensuring financial literacy and economic opportunity is the new civil rights issue for this generation, and the real underlying solution, in troubled places both here and around the world, is to create job opportunities—and not just government-sponsored jobs. Some of these jobs will be broadly based, from private sector jobs to newly minted corporate jobs for the college trained. But even more important are the small business jobs and the magical power of entrepreneurship that creates jobs.

We must move one hundred million or more Americans (approximately one-third of the U.S. population) up and into true participation in the free enterprise system, anchored with education, self-esteem, real choice, and real opportunity for all. I not only want rich and poor people alike to think for themselves, I also want them to think differently. I want them to reimagine everything and then to go and do something about it in their lives. This is what I mean when I talk about wealth. This is about delivering the memo to families who never got one.

Restoring Hope

Giving people financial literacy and an opportunity for self-determination means giving them hope. But the reverse is also true: making this country work for the masses of struggling Americans, the middle class, and those who want to one day join them depends on the power of hope itself. Hope is so powerful that you only need a super minority of it to change the world. Indeed, Shane Lopez, a leading social scientist measuring the impact and power of hope, found that hope is a greater indicator of academic success and graduation rates than ACT and GPA scores combined. ⁹

The hope factor, as I describe it, is the general feeling that if you follow the rules it will pay off with an opportunity for success or failure on your own merit. When the average person no longer believes this is the case, then all bets are off and all of society is screwed. At the end of the day, this is not an economic crisis in America; it is a crisis of virtues and values. It’s not what we are doing but what we are about.

No one succeeds in the long term and no society can achieve long-term sustainable success by remaining focused on what it is against. The soaring rhetoric of our Constitution, our Bill of Rights, and even our best business plans are all “what I am for” sort of stuff. It’s all built on hope and the intangibles of belief.

What poor folks need now is action and a plan based on what America is for in a world expert at figuring out what it is against. We must be for and work toward financial literacy and access for all. We must be in favor of providing people with the education and opportunity to discover and follow their own paths to self-determination.

Just think of the magic that the Occupy Wall Street movement could have worked if it had done more than simply channel a generational frustration with capitalism. Think about the power of developing an alternative economic system and then placing that bold, practical, and compelling vision before America. There was a moment when they would have had nothing but buyers for that dream. Even the media was looking for something it could print about an agenda that a generation could be for and then an action plan to do something to accomplish it.

It may have been a missed opportunity, but that opportunity still exists. We must harness hope by shifting from stating what we are against to working toward what we are for, and that alone will create positive economic energy. That alone changes the tone and culture of the environment in which we live and lifts us all up. Black poverty, white poverty, it’s all poverty.