How the Poor Can Save Capitalism: Rebuilding the Path to the Middle Class / Edition 1 available in Hardcover, eBook
How the Poor Can Save Capitalism: Rebuilding the Path to the Middle Class / Edition 1
- ISBN-10:
- 1626560323
- ISBN-13:
- 9781626560321
- Pub. Date:
- 06/02/2014
- Publisher:
- Berrett-Koehler Publishers
- ISBN-10:
- 1626560323
- ISBN-13:
- 9781626560321
- Pub. Date:
- 06/02/2014
- Publisher:
- Berrett-Koehler Publishers
How the Poor Can Save Capitalism: Rebuilding the Path to the Middle Class / Edition 1
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Overview
Raised in poverty-stricken, gang-infested South Central Los Angeles, Bryant saw firsthand how our institutions have abandoned the poor. He details how business loans, home loans, and financial investments have vanished from their communities. After decades of deprivation, the poor lack bank accounts, decent credit scores, and any real firsthand experience of how a healthy free enterprise system functions.
Bryant radically redefines the meaning of poverty and wealth. (It’s not just a question of finances; it’s values too.) He exposes why attempts to aid the poor so far have fallen short and offers a way forward: the HOPE Plan, a series of straightforward, actionable steps to build financial literacy and expand opportunity so that the poor can join the middle class.
Fully 70 percent of the American economy is driven by consumer spending, but more and more people have too much month at the end of their money. John Hope Bryant aspires to “expand the philosophy of free enterprise to include all of God’s children” and create a thriving economy that works not just for the 1 percent or even the 99 percent but for the 100 percent. This is a free enterprise approach to solving the problem of poverty and raising up a new America.
Product Details
| ISBN-13: | 9781626560321 |
|---|---|
| Publisher: | Berrett-Koehler Publishers |
| Publication date: | 06/02/2014 |
| Pages: | 176 |
| Sales rank: | 514,154 |
| Product dimensions: | 6.30(w) x 9.40(h) x 1.00(d) |
About the Author
Read an Excerpt
HOW THE POOR CAN SAVE CAPITALISM
REBUILDING THE PATH TO THE MIDDLE CLASS
By JOHN HOPE BRYANT
Berrett-Koehler Publishers, Inc.
Copyright © 2014 John Hope BryantAll rights reserved.
ISBN: 978-1-62656-032-1
CHAPTER 1
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. 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. 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. 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. 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. 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 selfperpetuating 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. 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.
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. Middleclass 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.
(Continues...)
Excerpted from HOW THE POOR CAN SAVE CAPITALISM by JOHN HOPE BRYANT. Copyright © 2014 John Hope Bryant. Excerpted by permission of Berrett-Koehler Publishers, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
Introduction: Harvesting HopePART I: SEEDING HOPE
Chapter 1: Separate, Unequal America
Chapter 2: A New Look at Income Disparity
PART II: INVESTING IN HOPE
Chapter 3: Cracking the Code of Finance
Chapter 4: Banking and Financial Services
Chapter 5: The Working Family’s Hedge Fund
PART III: NURTURING HOPE
Chapter 6: 700 Credit Score Communities
Chapter 7: The Power of Small Business and Entrepreneurship
PART IV: HARVESTING HOPE
Chapter 8: The HOPE Plan
Chapter 9: Project 5117
Conclusion: Where We Go from Here
Notes
Acknowledgments
Index
About Operation HOPE Inc.
About the Author