E-Letter To Roger O. Crockett And BusinessWeek Re: "Jesse Jackson's Take On CEO Crime"
I have been meaning to write you for some time. Your October article on Rev. Jackson, "Jesse Jackson's Take on CEO Crime" was very interesting. I thought your defensive tone of Rev. Jackson was both refreshing and appropriate, especially when the forum is an esteemed financial publication. Too often, I find the mainstream and financial media, and its journalist corps to be compromised by partisan attachments and interests - even to the point where they will use personal failings of leaders to indict the efficacy of programs and policies bigger than any personality. This has certainly been the case with Rev. Jackson. To see Rev. Jackson's impact, measured closer to proportion, in terms of his actual contribution to America's economic debate, is really a sight for sore eyes. Rev. Jackson's connection of corporate malfeasance and the denial of access to capital is a skillful and largely accurate one. The mismatching of financial and human capital is the point of intersection and common denominator for both racial discrimination in the workplace and negotiating table, and corporate greed in the board room and on the balance sheet. And anyone who underestimates or undervalues Rev. Jackson's contribution to increasing the financial literacy of Black Americans, over the past few years, is either disingenuous, spiteful, or woefully uninformed.
I am not sure if you were under word-count restraints, as I suspect was the case, but your piece would have been so much more interesting and valuable to your vast readership if you had explored more of the depths of Rev. Jackson's political economy worldview, juxtaposed to the Black economy - a sector which is worsening by the month. There you would have found some rich material and more of an explanation for the increasingly polarized view of Rev. Jackson in Black America, across class and generational lines, your reference to the movie Barbershop notwithstanding.
While I believe that he has accomplished a great deal of good for Black America, I believe that Rev. Jackson made a decision, in 1984, 1988 and 1992 that he would go but only so far on behalf of the legitimate aspirations of Black America. In 1984 Rev. Jackson decided that a powerful display of unity with the Nation Of Islam's Minister Louis Farrakhan should be exchanged for continued access to the power center and support resources of the Democratic Party, then led by Robert Strauss. In 1988, Rev. Jackson decided that the elements of his agenda, coalition and ideology that the Democratic Party could not easily absorb could be exchanged for, again, elite access to the power center and support resources of the Democratic Party. And in 1992, Rev. Jackson slammed the door shut on a viable Independent political option and the use of third-party candidates to further the best interests of his coalition, by refusing to take a step away from the Democratic Party and embrace the candidacy of Ross Perot. This took place, even though the Reverend was lobbied to seriously consider supporting Mr. Perot, by individuals across the Black political spectrum, and reportedly, even other members of the Jackson family.
As a result of these decisions (which are really one decision made over time), Rev. Jackson became more accountable to the establishment that accepted him than to the grassroots that produced him. In the process, he became, what I call, "White America's Black Leader," a paid position within the American political establishment. More on that at another time.
But in this leadership capacity, Rev. Jackson has a wide portfolio, one that increasingly finds him present in economic and financial affairs. That is where you locate him, in your piece, actively managing the economic relationship between Black and White America at the point of intersection of least tension for the establishment. It is appropriate, to examine what Rev. Jackson accomplishes in that sphere. But it is even more interesting and important to see what economic issues Rev. Jackson does not tackle, and how skillful he is at avoiding and only lightly touching the root issues and policies that are at the core of the racial divide in this country. By looking there, you would understand why Rev. Jackson's influence and popularity is diminishing among both the White establishment and Black America, simultaneously.
A key to grasping this, is to consider the negative effects of integration, which is difficult for most to do because untold millions have consciously and subconsciously equated the word "integration" with "righteousness," "freedom," and "equality," even "Jesus Christ" for some. While the integration of Blacks into the American society has given a very superficial picture of fraternity and sorority, the integration process - where economics is concerned - has actually increased tensions, as a result of dashed expectations and a clearer view, for Blacks, of discrimination and the mindset of White supremacy. Some have noticed. One writer with an astute eye, is Lawrence M. Mead, the author of The New Politics Of Poverty. While I would take issue with some of his use of the distinctions of "left," "right" and "liberalism" on the political spectrum, I think I understand his points regarding this subject. Think of Rev. Jackson's evolution as you read an excerpt of Mr. Mead's book. He wrote, in 1992:
Analysts on the left not only oppose a more authoritarian work policy, they fear it would shift politics further to the right. With more work and less dependency among the needy, the welfare state would shrink and society would return to a market basis where most people had to labor to survive. The best argument for this conjecture is historical. For most of its first two centuries, the American republic offered little subsidy to poor people. Even the destitute worked. Yet, because the society was open and competitive compared to Europe, most people realized some gain for their labor. As a result, they perceived the market as fair, and a serious socialist movement never developed. If more of the poor worked today, they could achieve similar advancement, and the case for radical social change would be even weaker than it is now.
However, my hunch is that the outcome would be more radical. History shows that, as groups become more integrated, they feel they can make more demands on the society. A poor population working at higher levels would probably retain much of its historic resentments, but would now have much greater resources to prosecute them. The new workers would gain confidence and political skill from employment and, above all, a stronger claim on the concern of other Americans. The labor movement offers an example. Unions became major players in national politics, not in the nineteenth century when the movemnet was marginalized and sometimes extremist, but in this century, when, with greater numbers and legitimacy, it was able to exact key concessions during the New Deal and succeeding Democratic admministrations. Other examples come from ethnic groups. Only after immigrant populations become sure of their Americanism do they make claims as groups.
The new workers would be likely to make demands, in part, because most would be nonwhite. Blacks, and, to a lesser extent, Hispanics have historically favored larger government, and this would not immediately change. Needy members of these groups, once they were required to work, would find their opportunities enlarged. But like other workers, they would encounter new problems, and these would generate new demands. Precisely because they were advancing, they would be more likely to encounter racial bias, as well as shortcomings in support services. If more welfare mothers had to work, they might accelerate the movement for government-supported child-care, parental leave, and so on.
The psychology of integration would also favor radicalism. Higher work levels would force disadvantaged blacks to work alongside, and compete with, comparable whites as never before. Anxiety among blacks about whether they could succeed would probably provoke calls for new forms of affirmative action and other government protections against white employers and co-workers. Working and middle-class blacks tend to be more militant on race issues than the poor, just because they have more contact with whites and their remaining prejudices. Thus, if more poor blacks took jobs and increased their income, politics could initially be driven left, not right.
British history supports this possibility. Around the turn of the nineteenth century in Britain, many workers and agricultural laborers became heavily dependent upon public relief. Then, in 1834, parliament abolished their right to to receive assistance in their homes. Families could henceforth receive assistance only by entering a workhouse. The new policy, intended to reduce the relief rolls, was not fully implemented, but it transformed the British working class. The loss of aid forced the emerging proletariat to come to terms with the market economy; workers' political goals shifted from avoiding or attacking industrialism to achieving equality within it. The eventual result was not dependency but socialism. For the United States today, the equivalent would be to abolish AFDC or transform it into workfare. This would require the core of poor America, for the first time in a generation, to seek survival through the workplace rather than outside it. As in Britain, the chimera of dependency would have to be given up and replaced with the progressive goal of equality among workers.
After this, a new politics of redress would probably appear first in an upsurge of labor organizing. One form would be more militant municipal unionism, already seen in cities like New York where ethnic groups have traditionally dominated one or another sector of the public service. More important would probably be a wave of new organizing in the private-sector service industries that have recently provided the bulk of new employment for the low-skilled. Unlike manufacturing, these jobs cannot easily be exported to other regions or overseas, so they are ripe for organization.
The next frontier would be elective politics. Overstressed new workers would funnel demands into the Democratic Party, or, conceivably, a splinter party further to the left. The new movement - Jesse Jackson's Rainbow Coalition may prove a harbinger - would be an economic analogue to the civil rights movement. The new workers would demand protections like greater affirmative action, but also enhanced benefits, job training, and other services. Civil rights leaders of the 1960s had demanded a "freedom budget." Now that more blacks were working, the rest of society would be much more receptive.
Blacks would also have more power to push for change themselves. In July 1990, John E. Jacob, president of the Urban League, called for an "Urban Marshall Plan" to invest in infrastructure and minority education and thus save America's cities. Appealing not only to whites, he said blacks now had the "critical mass" of middle-class and professional people to advance this program on their own. Black "lawyers and computer experts, corporate managers and business people" were goling to turn out to be "revolutionaries" in "suits and cuff-links," he predicted. They would remember their heritage and demand redress for disadvantaged blacks left behind in the inner city.
As this suggests, so many blacks have attained success today that the country may face a black-led political movement regardless of what is done, or not done, about poverty. This is already apparent in the Jackson movement and on issues, such as South Africa and recent appointments to the Supreme Court, where blacks have particular interests and exercise special influence. But the bottom, not the top of black society is crucial to how any black agenda is received. White America feels much more threatened by incompetent than successful blacks, and doing something about them will be the test of any renewed liberalism, black-led or otherwise.
Rev. Jackson probably understands what Lawrence Mead wrote better than virtually anybody. He has consistently and masterfully moderated and appeased his left flank, even, at times, by cleverly offering them access to himself. He has done by many of them as the Democratic Party has done by him. But Black Americans have begun to judge for themselves whether or not economic integration as laborers is in reality as it was advertised. As Mr. Mead accurately describes, the result of what Blacks have felt in the workplace has been more intense calls for "new forms of affirmative action and other government protections against white employees and co-workers." That is one of the reasons why the reparations movement has accelerated in recent years. Too few economists and political observers remember that it was Rev. Dr. Martin Luther King who identified affirmative action as the lowest form of reparations. Blacks on Jackson's "left" and "right" want the real thing after only a handful of decades under the "access-to-capital-as-access-to-jobs-and-set-asides" approach. Rev. Jackson has skillfully raised the ante for corporations, positioning himself as the inspiration and leverage behind EEOC action, class-action lawsuits, and boycott threats, which always aim for out-of-court settlements, fines, training, and quota hiring and contracts as the endgame. Some Blacks are satisfied and benefit from the spoils, many more aren't and don't, and have grown tired of the cycle of settlements and corporate boardroom deal-making that seems to benefit the Black business establishment and its most wealthy constituents.
To no surprise, Rev. Jackson boasts of his economic maneuvering, identifying it as the latest and last phase of a historic process, even the "economic analogue" that Mr. Mead notes with prescience. It is here where Rev. Jackson's penchant for protest and creating "access" gets the best of him, as his monorail method to economic empowerment has the rhetoric and trappings of an exercise in self-determination but in practice is a plea bargaining. Still, Reverend Jackson frames his limited effort in the most laudable terms. In his book It's About The Money! written with his son, Congressman Jesse L. Jackson Jr. with Mary Gotschall, he writes:
This book must be viewed in the historical context of the civil rights movemnet, to which I have devoted my life. I view economic emancipation of African Americans as the fourth phase on a historic continum. If I were to compose a four-movement Freedom Symphony, the first movement would be the emancipation of the slaves: a two-hundred-year battle, rooted deeply in our Constitution - a season of walls that limited movement and roofs and artificial ceilings that limited growth. The second movement would be another one-hundred-year struggle to end legal segregation - more walls more roofs. The third movement would be the enfranchisement of all Americans, eighteen and older, through passage of the Voting Rights Act. The fourth movement - the final stage of the struggle - would be access to capital. Hence this book. You could succeed at all the previous three movements, but if you didn't succeed at the fourth, you might starve. That's how crucial economic emnacipation is. People of color and the working poor have won everything they've fought for: the right to organize, the right to form unions, and the end of racial and gender barriers as a matter of law. But we've not fought the battle for access to and democratization of capital. It's the ultimate battle. It's the unfinished business of our struggle to make this a more perfect union for all Americans, in which no one will be left behind.
Sounds good. But no where in Rev. Jackson's book do you see mention of the real and most efficient means by which access to capital and the democratization of capital is to be achieved for Blacks - by their collective pooling of financial resources, talents and skills into a Black economy that 1) maintains an internal circulation of its own financial capital and 2) attracts investment from the broader economy by lobbying for a growth-oriented fiscal policy that leads to production. 3) commercializes ideas and its own novelties and 4) controls the distribution of such to other communities and nations. Remember, Rev. Jackson says that he is looking to secure the "economic emancipation of African Americans." It reminds me of Minister Louis Farrakhan's admonition that emancipation means "to free from one's hand but not from one's control."
Instead of amplifying the call of the above, Rev. Jackson frames most every economic issue in terms of the redistribution of White wealth, yet, never making an argument that effectively deals with or confronts the root method of how Whites obtained much of their wealth in this country, from Blacks, nor a remedy for such. It is very, very clever indeed. A false economic worldview in the service of a false political ideology that uses partisan politics to maintain the status quo. Reverend Jackson's work, though liberating in many respects, actually slows the rate of progress and revolution in Black America.
Because of Rev. Jackson's loyalty to the Democratic Party and liberal economic theory, even in his economic and financial-oriented role, he can't muster the strength to advocate for the elimination of taxes on capital that hurt nascent enterprises in distressed, rural and urban areas. No capital gains tax elimination with a 6 or 12-month holding period for businesses that operate in Black America. No, Rev. Jackson argues that what Black America needs is "patient capital," obtained through a 5-year holding period on equity held in distressed urban and rural areas (even Rep. J.C. Watts has swallowed the provision, in legislation if not theory), never mind that delaying a capital gain and return on investment makes an equity investment in Black America behave like a debt instrument. With this go-slow approach only the politically expedient and nice-sounding approach of a watered-down "Marshall Plan" will do for urban America, where corporations and quasi-venture capital funds (American Private Investment Companies) shoulder the load for making risky investments in distressed areas, supposedly attracted by insurance guarantees for their investments. It sells politically and rhetorically in the mainstream media to place Black America's struggling economy alongside those of the economically developing world but does not work in practice, due to the bureaucratic tape that surrounds the project and economic fallacies that contaminate it. Just ask Goldman Sachs what a headache it has been trying to take advantage of the program. The APIC initiative was announced by President Clinton at Rev. Jackson's 1999 Rainbow Push Wall St. Project, which I attended. But its impact can't be felt in the street by the masses.
Rev. Jackson's economic worldview and method is to narrowly access what White America has as its financial "capital," on the basis of a limited argument framed in the irresistible language of fairness and justice. Rev. Jackson does not, has not, and probably will not ever forcefully apply his arguments within the Black community where $500 billion of financial blood circulates in a community that lacks financial arteries or veins - a community-oriented banking system and local and national institutions of financial intermediation that can provide liquidity in the form of credit and equity to businesses and persons deemed "too risky" for major traditional lending institutions. For Rev. Jackson, to address these problems appropriately would frame him in the eyes of the White majority and many "minoritiy groups" as a Black nationalist, a designation that would violate the terms of the exchange agreement he has reached with the political and financial establishment. In his dealings with the establishment, Rev. Jackson is careful to never address Federal Reserve policy in a meaningful way (although his son has been known to challenge the Phillips Curve theory of Chairman Greenspan that directly correlates unemployment with inflation). He does not openly challenge the filing, qualifying, and governing statutes and procedures that make it extremely difficult for Black-owned lending institutions to become chartered and thrive. Rev. Jackson does not spend any of his political capital arguing that the Federal Reserve establish a firm unit of account that would prevent deflation and inflation, and Rev. Jackson has not consistently framed a critique of Federal Reserve policy in terms of how it affects the underclass, by ensuring a structural level of unemployment. And while he has stated his support for reparations and his intention to advance the issue, Rev. Jackson has not demonstrated any of the broad coalition building and grassroots interaction necessary to further the issue in Black America and among his non-Black coalition partners. To confront the errors of Federal Reserve monetary policy would place the Black leader in unity with supposedly "right-wing" lily-White populists and to support reparations would place the elder Jackson in unity with supposedly "left-wing" Black and Brown progressives - either category violates the exchange agreement that has been carefully crafted with what L. Flecther Prouty has referred to as the "power elite." The only Black political leader that I know of who has had the courage and insight to take on monetary policy, while a member of the Black political establishment is Andrew Young.
To be sure, Rev. Jackson weighs in on "revolutionary" gatherings and subjects like the current anti-war effort and the corporate corruption scandal; but his voice comfortably amplifies that of others in ways that do not cut away at the foundations of injustice and oppression.
But what Rev. Jackson is able to do is listen, and weave the legitimate grievances of the underclass into a language and redirect them into a broader agenda that is palatable to the establishment. The result is a net canceling out - maintenance of the status quo or minute incremental change - as the poor are led to believe that something is being done at a foundational level to solve their problems. The wickedly wise and wealthy are protected from a more revolutionary assault on their grip on power; and the sincere among the wealthy are made to believe that they have exhibited benevolence.
Rev. Jackson views the concepts of access to capital and the democratization of capital as an outside-in undertaking, diminishing necessary inside-out endeavors by clear omission - writing in It's About The Money!, " Today we come to Wall Street to move corporate America through self-enlightened interest. It is in America's compelling national interest to tear down the walls that have limited growth and denied economic opportunity for all its citizens. Inclusion is the key to economic growth. Blacks, Latinos, women, and rural people in places like Appalachia need to be viewed not just as consumers in our society, but as people of diverse talents and training, with investment potential and underutilized skills." Rev. Jackson knows that there is no real collective self-enlightened interest in Black America by which "it" comes to Wall Street. The root of that enlightened self-interest is the lack of self-knowledge, self-respect and self-love in Black America, that must precede its self-interest and produce trust. Rev. Jackson is right when he argues that "inclusion is the key to economic growth." Unfortunately, his constant pointing to access to what others have has taken the focus off of the Black community practicing inclusion within its self. Once a foundational level of self-sufficiency and independence is reached in Black America, inter-dependence becomes no problem.
Rev. Jackson advocates what he does not because he doesn't know any better but because doing better interferes with an agreement that he and many others have made with the political establishment.
Their agreement cannot last. Soon, neither those at the bottom of the pyramid nor those at the top will trust an intermediary or intercessor that buffers their conflict.
I look forward to your next column on Rev. Jackson, Wall St. and Corporate America.
I am sure you will agree there is much more to the story than meets the eye.
Wednesday, November 13, 2002
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