Last Chance: How The President Can Finally Redress HBCUs & Fund Free Community Colleges

By William A. Foster, IV

“Wise men ne’er sit and wail their loss, but cheerily seek how to redress their harms.” – William Shakespeare 

I know everyone loves math problems, so here is one for you. What is 39.1 percent of zero? I suspect even those who find math an arduous task know the answer is zero to this problem. It appears everyone except the president and congress that is. Although the president does not seem to know how to do simple math problems, it does not seem to prevent him and his administration from wanting to add new bills to taxpayers with grand ideas of free community college. The Hill recently reported that the cost of “free” community colleges could cost the American taxpayer an estimated $60 billion over the next decade. Meanwhile, the administration continues to ignore the idea of restitution for HBCUs who have been historically underfunded by both state and federal governments since their inception. As you recall, the administration gave 100 plus HBCUs only $850 million over a decade. Quite the gap, given both serve virtually the same communities and students.  Former HBCU Digest editor Autumn Arnett in an interview pointed out that, “HBCUs were truly in a better position under President George W. Bush than they have been under President Obama.” The president and his administration’s policies toward HBCUs have potentially cost the institutions multiple billions when you factor in the Parent PLUS loan debacle that sent many students home and the longer term implications of students who would have graduated and become alumni donors. So how can we pay for this grand plan of “free” community college, right the wrongs of HBCU funding, and get the support of the American taxpayer? Tap into a $2.1 trillion piggy bank that American corporations are keeping abroad and refusing to bring home because of the world’s highest corporate tax rate of 39.1 percent (below).

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The idea of giving corporations a tax holiday has been floating around the past few years as the cash hoard they have abroad continues to amass. Unfortunately, due to the drubbing that happen to the federal government in 2004 giving a tax holiday to corporations there is little motivation to do so again. According to a report from the Democratic staff of the Senate Permanent Subcommittee on Investigations; the tax holiday cost the U.S. treasury $3.3 billion in tax revenues, saw the companies that received tax holidays cut 20 000 jobs, and decrease their research spending. This despite the Wall Street Journal reporting, “When Congress passed the repatriation tax holiday in 2004, the legislation specified that the funds should be earmarked for activities like hiring workers or conducting research and prohibited using the money for executive compensation or buying back stock.” So why on earth would I suggest we do it, again? I love my kids, but I do not know anyone who is a parent who would give their child a bag of candy, tell the child they can have one piece, and then leave the room and not expect to come back to an empty bag.

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Why did the federal government not A) enforce penalties for non-compliance B) have the companies put the funds into organizations that conduct job training and/or independent research facilities? Again, why leave it up to the corporation to do the right thing here. The temptation for the companies to not comply seems asininely discernible. After all their fiduciary responsibility is first and foremost to the shareholders of the company. This time around however, President Obama and congress could offer the corporations a tax holiday at 10 percent (a subtle penalty for the previous 2004 digression) that would generate $210 billion. Corporations would have to put $210 billion or ten percent of the amount they choose to bring back during the holiday period into the newly created New America Education Endowment, where it would then be disbursed to the institutions themselves within 90 days of receipt. $100 billion could be set aside for the community college program because let us face it, if the government says $60 billion is the cost, it is safe to assume it is more. Now, depending on what number you feel HBCUs deserve would be up for debate, but if it is less than $31.5 billion (representative of Africa America’s population percentage), then HBCU advocates should be up in arms. The remaining $80 billion would go to vocational training programs, improving K-12 schools, and student loan relief. The latter is becoming an ever increasing danger for the 40 and under population in America. America as a whole now carries over $1 trillion in student loan debt, which while making the country very educated is also making it so indebted that it will never be able to reap the benefits of that education. However, I would not be in favor of including debt relief from for-profit colleges, but that is my own personal bias against them. It should be noted that in order for the holiday to take effect, the administration must set a minimum amount that must be repatriated for it to take effect. Otherwise, corporations may not bring enough back to fund the new endowment program. Again, have the government set the terms in this case not instead of allowing for malleable terms as before.

I am sure there could and will be some argument by a great many groups in the country and their interest for the usage of some of the funding, but the point of the matter here is there is money available to achieve the president’s ambition to cement his legacy and a great many other things. In this case, President Obama actually would get support from a Republican led congress and senate and probably opposition from his own party. Although, support could get complicated if the president decides to exclude those receiving free community college (see class warfare argument) who have whatever the administration deems as upper class income, which may boost support from his party, but in a Republican controlled house and senate may not be worth the fight.  It could also considerably spur both parties to create some corporate tax reform. However, given how long the country has been waiting on any sort of tax reform just getting the holiday passed seems to have more fortuitous odds than any rational governing. An instance where both parties can show effort toward a more moderate governance would do well for both parties approval ratings in the eyes of the public, which is near all-time lows.

Ultimately, we need a more educated country, which includes a long overdue redress historically for HBCUs and although “free” community colleges are still questionable versus a major K-12 investment, taxpayers can not feel they are on the hook for another pie in the sky ideal. Nor can corporations simply be left to Do The Right Thing. An opportunity to try a new model where tax funds go directly into the public institutions and programs that need it as opposed to being subject to governmental red tape and bureaucracy is also at stake. After all, even shareholders are going to soon be clamoring for these mountains of cash to be returned to them in the form of dividends and they will be met with the same math that the U.S. Treasury was a decade ago. Any percentage of 100 percent of zero is still zero – and that is a losing proposition for all stakeholders involved.

HBCU Money™ B-School: How To Start An Airline

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How many HBCU owned airlines are there in America? Zero. How many African American owned airlines are there in America? Zero. In Africa, the story is quite different with a number of airlines popping up over the past five years in the ownership hands of native Africans. So it appears we have some catching up to do with our brethren in the motherland. Given HBCUs are often flush with engineering talent, one HBCU owned airline alone could create massive job opportunities. Jet Blue employs almost 14 000 people and is one of the smallest low fare regional airlines, while one of the bigger regional players Southwest Airlines employs almost 50 000.

However, starting an airline is not for the faint of heart and maybe one of the hardest entrepreneurial challenges one can take on. Boeing’s airline startup page says, “Few businesses have as many variables and challenges as airlines. They are capital-intensive. Competition is fierce. Airlines are fossil fuel dependent and often at the mercy of fuel price volatility. Operations are labor intensive and subject to government control and political influence. And a lot depends on the weather.” However, if you are up to the challenge of finding a niche in the space, then you are on your way to creating a multi-billion company since the industry average of value is $2.7 billion (below) according to Yahoo Finance.

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So visit Startup Boeing’s website here and as the Nat King Cole song says and quoted in the Tuskegee Airmen movie of 1995, “Straighten up and fly right.”

A New Threat To African American Owned Media Launched By Comcast/NBC

By William A. Foster, IV

“I do not expect the white media to create positive black male images.” – Huey Newton

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I have to say when this first came across my feed I thought it was a hoax. NBC, a wholly owned subsidiary of Comcast, would not really be getting into culture specific media. I was wrong, then I was worried. Below is the editorial release from Amber Payne, Editor of NBCBLK: 

NBCBLK covers stories by, for and about the black community. Our product is meant to elevate America’s conversation about black identity, politics, and culture. We share positive, solution-based journalism and report on challenging issues that communities of color face today. NBCBLK taps NBC News journalists around the world to tell these stories, and we curate reports from NBC News platforms — Nightly, Today Show, Dateline, and local affiliates among other NBC outlets.

We welcome your ideas, your feedback, and your perspective.

It goes without saying that it is already difficult to get many African Americans to consider African American news outlets first when they consume media be it newspapers, television, radio, or digital media. Many in African America often feel validated when other communities promote businesses targeted at us as some form of acceptance.  It goes back to the old saying about our perception of white ice being colder than black ice. In media, it is even more complicated given its ability to shape the values and ideals of its consumer. When news breaks on anything relating to our community very rarely do we as African Americans turn first to our news sources. Even covering the Mike Brown, Trayvon Martin, and other police shootings almost none of my Facebook feed posted articles relating to the matter from an African American owned media outlet. According to BlackNews.com, “There are currently about 200 different black newspapers in about 150 different cities across the United States. Many cities, such as Los Angeles and New York, have more than one paper.”  This is not including digital only sites like HBCU Money, HBCU Digest, and many other HBCU owned sites. Granted, we are lacking in television station ownership and have a fleeting ownership of radio stations, but when it comes to digital newspapers and magazines we have a strong presence, but it is under consumed by our communities.

This latest foray by NBC will potentially only make that even more difficult as we consistently turn to European American owned outlets to get our point of view. CNN, MSNBC, NY Times, just to name a few or the ones like NBCBLK who cater to African Americans with European American ownership such as The Root, BET, and even TVOne to some degree given its complex partnership with you guessed it, Comcast. Their views of us often shaped by internal politics and biases be they liberal or conservative.

And who is benefiting from this media asset? Well to know that you would have to know who Comcast major shareholders (below) are. The top ten institutions that own Comcast shares are a who’s who among major financial institutions, none of which are African American owned.

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Therefore every click and view that the new site receives is only increasing the financial value of these media and financial institutions outside of our community’s ownership and control. However, African American owned media should not shy away from this challenge or competition. Competition is the business we are in and to reach our audience we must think ahead of the curve and create value that they can not get anywhere else, but it goes without saying they are instantly a game changer. That sound you hear? African American owned media company CEOs and presidents rushing to their war rooms.

HBCU Money™ Business Book Feature – Ebony & Ivy: Race, Slavery, & the Troubled History of America’s Universities

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A 2006 report commissioned by Brown University revealed that institution’s complex and contested involvement in slavery—setting off a controversy that leapt from the ivory tower to make headlines across the country. But Brown’s troubling past was far from unique. In Ebony and Ivy, Craig Steven Wilder, a rising star in the profession of history, lays bare uncomfortable truths about race, slavery, and the American academy.

Many of America’s revered colleges and universities—from Harvard, Yale, and Princeton to Rutgers, Williams College, and UNC—were soaked in the sweat, the tears, and sometimes the blood of people of color. The earliest academies proclaimed their mission to Christianize the savages of North America, and played a key role in white conquest. Later, the slave economy and higher education grew up together, each nurturing the other. Slavery funded colleges, built campuses, and paid the wages of professors. Enslaved Americans waited on faculty and students; academic leaders aggressively courted the support of slave owners and slave traders. Significantly, as Wilder shows, our leading universities, dependent on human bondage, became breeding grounds for the racist ideas that sustained them.

Ebony and Ivy is a powerful and propulsive study and the first of its kind, revealing a history of oppression behind the institutions usually considered the cradle of liberal politics.

HBCU Money™ Dozen 1/19 – 1/23

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Did you miss HBCU Money™ Dozen via Twitter? No worry. We are now putting them on the site for you to visit at your leisure. We have made some changes here at HBCU Money™ Dozen. We are now solely focused on research and central bank articles from the previous week.

Research

BlackBerry issues futile call for ‘app neutrality’ l Network World ow.ly/HNePp

EU should oblige Internet firms to hand over encryption keys, says antiterrorist advisor l CIOonline trib.al/tcp6U5y

Report: Apple Watch aims to last 19 hours per charge l Macworld dlvr.it/8Bv8dR

Learn how oysters promote healthy coasts l NOAA 1.usa.gov/1ATlTQW

6 products that will protect your privacy l Network World bit.ly/1CjHvtX

New research re-creates planet formation, super-Earths, giant planets l Livermore Lab 1.usa.gov/1yy3j3H

Federal Reserve, Central Banks, & Financial Departments

The pace of poverty reduction in Ethiopia has been impressive—Ethiopia Poverty Assessment l World Bank wrld.bg/HL5GL

What are potential indirect effects of attending a certain type of high school? l St. Louis Fed bit.ly/1xE6kLN

How can we foster the ongoing innovation of online content? l Davos wef.ch/1yGSfBJ

Study finds unique opportunity for women in Family Businesses l CPI Financial ow.ly/HNUHA

Five Simple Questions That Reveal Your Financial Health and Wealth l St. Louis Fed bit.ly/1Cjp5JE

Drop in oil prices is 3rd largest since WWII. All 9 commodities are weakening l World Bank wrld.bg/HPvK1

Thank you as always for joining us on Saturday for HBCU Money™ Dozen. The 12 most important research and finance articles of the week.

The HBCU Money™ Weekly Market Watch

Our Money Matters /\ January 23, 2015

A weekly snapshot of African American owned public companies and HBCU Money™ tracked African stock exchanges.

NAME TICKER PRICE (GAIN/LOSS %)

African American Publicly Traded Companies

Citizens Bancshares Georgia (CZBS) $8.90 (0.00% UNCH)

M&F Bancorp (MFBP) $4.50 (0.00% UNCH)

Radio One (ROIA) $1.80 (6.25% DN)

African Stock Exchanges

Bourse Regionale des Valeurs Mobilieres (BRVM)  249.86 (0.05% UP)

Botswana Stock Exchange (BSE)  9 497.33 (0.09% DN)

Ghana Stock Exchange (GSE)  2 183.24 (3.44% DN)*

Nairobi Stock Exchange (NSE)  166.68 (N/A)

Johannesburg Stock Exchange (JSE) 48 816.57 (0.11% DN)

International Stock Exchanges

New York Stock Exchange (NYSE) 10 788.33 (0.65% DN)

London Stock Exchange (LSE)  3 664.41 (0.53% UP)

Tokyo Stock Exchange (TOPIX)  1 403.22 (0.99% UP)

Commodities

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HBCU Money™ B-School: Hedge Fund Manager William Ackman Explains Finance & Investment (Video)

William Ackman, Founder and CEO of Pershing Square Capital Management, L.P., is a hedge fund manager and investor activist. According to Bloomberg, “(Pershing’s) 32.8 percent for the first 10 months of 2014, making it the No. 1 fund in Bloomberg Markets’ annual ranking of the best-performing large hedge”

He explains finance and investment in under a hour to help you get a better understanding of just what it takes to understand this often opaque and complex world.