Monthly Archives: April 2017

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HBCU Money™ Business Book Feature – Makers and Takers: The Rise of Finance and the Fall of American Business


Eight years on from the biggest market meltdown since the Great Depression, the key lessons of the crisis of 2008 still remain unlearned—and our financial system is just as vulnerable as ever. Many of us know that our government failed to fix the banking system after the subprime mortgage crisis. But what few of us realize is how the misguided financial practices and philosophies that nearly toppled the global financial system have come to infiltrate ALL American businesses,  putting us on a collision course for another cataclysmic meltdown.

Drawing on in-depth reporting and exclusive interviews at the highest rungs of Wall Street and Washington, Time assistant managing editor and economic columnist Rana Foroohar shows how the “financialization of America” – the trend by which finance and its way of thinking have come to reign supreme – is perpetuating Wall Street’s reign over Main Street, widening the gap between rich and poor, and threatening the future of the American Dream.
Policy makers get caught up in the details of regulating “Too Big To Fail” banks, but the problems in our market system go much broader and deeper than that. Consider that:

· Thanks to 40 years of policy changes and bad decisions, only about 15 % of all the money in our market system actually ends up in the real economy – the rest stays within the closed loop of finance itself.
· The financial sector takes a quarter of all corporate profits in this country while creating only 4 % of American jobs.
· The tax code continues to favor debt over equity, making it easier for companies to hoard cash overseas rather than reinvest it on our shores.
· Our biggest and most profitable corporations are investing more money in stock buybacks than in research and innovation.
· And, still, the majority of the financial regulations promised after the 2008 meltdown have yet come to pass, thanks to cozy relationship between our lawmakers and the country’s wealthiest financiers.

Exploring these forces, which have have led American businesses to favor balancing-sheet engineering over the actual kind and the pursuit of short-term corporate profits over job creation, Foroohar shows how financialization has so gravely harmed our society, and why reversing this trend is of grave importance to us all. Through colorful stories of both “Takers” and “Makers,” she’ll reveal how we change the system for a better and more sustainable shared economic future.

— Financial Times – Best Books of 2016: Economics
— Bloomberg Businessweek- Best Books of the Year

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The Finance & Tech Week In Review – 4/29/17


Every Saturday the HBCU Money staff picks ten articles they were intrigued by and think you will enjoy for some weekend reading impacting finance and tech.

10 Google Earth videos that show how much the world has changed l WEF wef.ch/2orszM3

These smart debit card practices could help you keep track of your budget. l Practical Money pmsfl.us/2mRcB80

Parents are 2.5x more likely to google “Is my son gifted?” than “Is my daughter gifted?” l World Bank wrld.bg/pfoC30bgbC1

Switzerland is planning to deliver medical supplies by drone l WEF wef.ch/2q1TRs5

Why our brains are now three and a half times bigger than those of our ancestors l WEF wef.ch/2q9zZk1

Fifty years ago, a historic #balloon launch that changed the way we see the #ozone layer l NOAA go.usa.gov/x5NvA

MIT is working on a fully autonomous robo-builder that designs and prints homes l New Atlas newatl.as/2pFu2hE

 What causes micro cracks that eventually fail wind turbine bearings? l Argonne  bit.ly/2oEMc3e

There’s a lot of mysteries, and surprises, on the seafloor l New Atlas goo.gl/FIkqKv

Liberals are no strangers to confirmation bias after all l New Scientist bit.ly/2oGYubu

 

 

HBCU Money™ Business Book Feature – A Paperboy’s Fable: The 11 Principles of Success


A young man learns that there is more to being successful than the bottom line.
A Paperboy’s Fable is a concise, entertaining fable that makes revolutionary points using age old principles. Whether someone is opening a lemonade stand or leading a startup software company, the11 Principles of Success make A Paperboy’s Fable a timeless tale that is as fresh as it is universal.

A Paperboy’s Fable also features interviews with many professors, entrepreneurs, CEO’s and General David Petraeus.

The Finance & Tech Week In Review – 4/22/17


Every Saturday the HBCU Money staff picks ten articles they were intrigued by and think you will enjoy for some weekend reading impacting finance and tech.

The U.S. elections helped push Treasury yields higher. But what else spurred rising rates? / St. Louis Fed bit.ly/2oPaLc1

Automation has totally eliminated just one career in the last 60 years / WEF wef.ch/2pNdJvu

Help high school students understand financial fundamentals with these lessons / KC Fed ow.ly/mCqM30apHJT

What you need to know about LGBT rights in 11 maps / WEF wef.ch/2puApE5

Large disparities exist in labor market outcomes across age, education, gender, race / KC Fedow.ly/S5IG30b4fcT

MIT selling 8 million coveted IPv4 addresses; Amazon a buyer / NetworkWorld ow.ly/TY3i30b4eSP

Indian Wind Capacity To Double In 5 Years & Will Meet Country’s 60 Gigawatt Target / Clean Technica ow.ly/QKTy30b4eKb

Quickest we could visit another star is 69 years – here’s how / New Scientist bit.ly/2p4nCrt

Wet ‘n’ windy portable turbine spins up battery power off-grid / New Atlas newatl.as/2plcxDi

How transparency and awareness will help stop the flow of illegally caught seafood / Pew Environment pew.org/2n59uOL

Colin Kaepernick & Craig Hodges: The Mistake of 1947


“History shows that where ethics and economics come in conflict, victory is always with economics. Vested interests have never been known to have willingly divested themselves unless there was sufficient force to compel them.” – B.R. Ambedkar

Hindsight is 20/20. (Actual) history is not meant to be revised, but it is meant to be analyzed. Unfortunately, that analysis can prove to be difficult often because we have a tendency to romanticize people and their decisions, ultimately leaving us vulnerable to making the same ones again. Objectivity to history is fundamental if we are truly to learn from it.

Seventy years ago, Jackie Robinson took to the field for the Brooklyn Dodgers. The move would effectively mark the end of African American ownership in sports. It was almost forty years prior to Robinson’s MLB debut when Rube Foster, considered the father of Negro League Baseball,  made a bold move to organize the African American baseball clubs and increase African American franchise ownership. “As early as 1910, Foster started talking about reviving the concept of an all-black league. The one thing he was insistent upon was that black teams should be owned by black men.” In the era of Marcus Garvey, this was very much in line with the belief that African American labor should be rewarding African American ownership. After a few hundred years of African American (free) labor building much of European American wealth, this was not asking a lot.

In fact, when we examine the period of 1865 through 1939, African America was on a building and ownership spree. African Americans built towns, businesses, banks, hospitals, boarding schools, colleges, and even an automobile company. This period, it could be argued was the apex of African American wealth and self-sufficiency in this country. A Great Depression, World War II, and Civil Rights Movement later, and African America’s economic self-sufficiency was virtually wiped out. Replaced by a culture of dependency and chasing of others’ colder ice. And we have to ask ourselves objectively, what did that get us? Very little. We went from over 100 banks and boarding schools down to 20 and 4, respectively. The African American private sector has been so decimated post-Civil Rights Movement that the African American unemployment rate is always twice the national average. As for sports, we went from dozens of African American owners to taking almost seventy years before seeing one after Robinson’s move.

Today, PWIs and 140 of the 141 professional sports in America make over $30 billion annually off the labor and sweat of African American athletes. Jerry Jones, the owner of the Dallas Cowboys and most valuable American professional team, made $300 million in profits in 2016 – without taking a hit, while the highest paid African American athlete, LeBron James, made only $77 million. It is not a secret that you can own a team a lot longer than you can play the sport. Jordan serves as anomaly of sorts, being an athlete able to gather enough wealth to buy a team and that was after something of a fire sale by Bob Johnson, who was in desperate need of liquidity for his other investments. This was mainly thanks to Jordan’s deal with Nike, which for all intents and purposes his popularity built. But while Jordan is worth $1 billion, Phil Knight, the owner of Nike, is worth a staggering $25 billion. Phil Knight and his wife have been able to pump hundreds of millions of dollars into the University of Oregon thanks to the company that Jordan “built”. Meanwhile, Michael Jordan’s philanthropy has been virtually nonexistent in helping empower African America’s institutions. The reality is that as much as it seems like players are making, the value of those teams rise faster than the players’ salaries, otherwise what would be the point of owning them? Remember, George Steinbrenner paid $10 million for the New York Yankees in 1973, the team is now worth $3.7 billion. In terms of highest paid athletes for perspective, Dick Allen of the Chicago White Sox in 1973 was making $200,000 versus today’s highest paid athlete being LeBron James who makes $31 million(salary, not including endorsements). The value of the Yankees has increased 370 fold versus the highest paid athlete’s salary at 155 fold. Or as famed comedian Chris Rock so eloquently puts, “Shaq is rich, but the white man who signs his check is wealthy.”

It has only been in recent years that African American athletes have begun to reclaim their ability to be voices of social commentary after a long slumber from the African American athletes of the 60s and 70s who were regaled and revered by the community for their usage of their platforms for social, economic, and political progress. In the 80s, 90s, and early 2000s, most African American athletes were too afraid of scaring potential sponsors or getting blacklisted to remotely speak out. Those that did like Mahmoud Adul Rauf and Craig Hodges of the 90s who did speak out found themselves blacklisted from the NBA faster than Usain Bolt running the 100 meters. Both exceptional players in their own right, but their boisterousness about African American issues turned off white owners and fans who think African American athletes should be seen and not heard, something eloquently analyzed by William Rhoden in his book 40 Million Dollar Slaves. It has been even more complicated since the turn of the millennium when athlete salaries skyrocketed thanks to television contracts for the major sports. This was especially sensitive at a time when many Americans have seen their wages stagnant for the past four decades across the country. Despite the owners making far more than the players, the majority of fans do not know who their teams’ owners actually are or how much they pocket from the ownership of the team.

The only African American who even attempted to buy an NFL team was Reggie Fowler, an Arizona businessman who was set to buy the Minnesota Vikings from Red McCombs back in 2005 for $600 million. Without ownership, sports franchies often reflect their owners’ network which means they have been slow to include other groups not within their social circles in key positions of power. Everything from general managers, coaches, and executives of teams have been and still largely are white males because that is who the owners’ circles entail. The real power was and is behind the scenes and this is ultimately what was forsaken by African America when they did not demand that the Negro Leagues/MLB and Black Fives/NBA/ABA be mergers of equals instead of acquisition of labor. With no African American perspective in any owners’ meetings outside of the NBA (and Michael Jordan has always been socially oblivious), it is likely that these men (and they are 99 percent men) are often tone deaf to racial and gender issues that impact their leagues and the environments from which the athletes who constitute their labor come from. We see this especially projected in the NFL’s ability to deal with domestic violence and Colin Kaepernick’s decision to protest continued police brutality. This is why at one point, we suggested that one of the major sports leagues should be adamant about recruiting Oprah Winfrey to buy a team (or two). Instead, the NBA at a moment when it could have done so after the Donald Sterling debacle simply goes and puts in place the same old hat in an act of pure tone deafness.

What would have happened if Oprah Winfrey owned a team? Well, just look at her management team at Harpo Productions. Women are well represented and more importantly so are ethnic minorities. The likelihood is that her team ownership would result in many more women, minorities, and HBCU graduates getting an opportunity to be decision makers and that issues such as race and gender would not be simply public relationed when an incident occurred, but instead proactively engaged.

Ultimately, history has shown us what not having ownership brings about in terms of social and economic impact. It is creating a space that allows for an employee like Colin Kaepernick to speak about an issue that is also part of the owner’s reality and allowing him to do so without retribution. It is also the circulation of the economic capital that flows between labor, ownership, and communities. This conversation is by no means limited to sports, but all of our economic behavior as it relates to how we view labor and ownership. Being accepted as someone else’s labor will always leaves you vulnerable to their interest, which can run counter to your community’s interest. Jackie Robinson may have broke a labor barrier into the major sports for African Americans, but the decision also built a wall to ownership and power for African Americans we have struggled to climb over ever since.