$57 vs. $24,000

This might be a sprawling post, but it's going to cover a lot of things that I feel like need to be said.

First, I am trying to buy a new car. While this is seemingly wholly unrelated to the achievement gap and education generally, I promise I will get to the connection. I have good credit (probably right around 700), I'm enrolled in law school (there's supposed to be earning potential in this, right?) and have a part-time job where I make somewhere in the neighborhood of $800 gross a month. I have more than adequate student loans to cover my living expenses, and almost the entire purpose of the part-time job is to pay for a car. I'm not being greedy or profligate here...I just want something that works and will last 5-7 years. I've already been ridiculed by quite a few people because I am considering getting a model without a radio and with hand-crank windows and manual locks. (Those "luxuries" run about $1200, in case you were wondering). So at the dealership, I was told that it was probably going to be an issue to get me a loan. I happen to be in the fortunate position that my parents are willing to co-sign for me. But this circumstance has led me again to reflect on the relative positions occupied by people during this "recession"/"credit crunch"/"crecession" (I am not making that last one up....I heard it on NPR). I am not going out on a limb in saying that most low income people don't have the greatest credit in the world. Many are living on high interest credit cards, and fall victim to such "deals" as the pay-day loan or, my new favorite: the H&R Blocks that pop up in Harlem around tax time offering your "tax rebate anticipation loan." You too can have money now and pay twice as much as you should for it later. The institutional economic structures in this country are every bit as responsible for cyclical poverty in this country as the schools, and I think that there is room to address both of these problems simultaneously.

This thought first struck me when I was reading an article in the Economist last year. I like the Economist...it's nice to get a non-American perspective on the world from time to time, and I think they are generally pretty balanced in their coverage. But like almost all other periodicals in this country, they too were briefly obsessed with what Barack Obama's "meteoric rise" meant for "Black America" (as if we can really put such neat and convenient labels on groups of people). The article that struck me most can be viewed here. It talks about how among black teenage males, it is "cool" to be dumb, the role of the family unit in the continued struggle of black americans, and how on average, black males make .70 on the dollar compared to whites. While all of this is depressing and relevant, the fact that struck me the most was this: when comparing the average net assets of white familes in the bottom income quintile to black families in the same income quintile, whites had $24,000 compared to only $57 held by blacks. FIFTY SEVEN DOLLARS. If you were not convinced that there is something racially motivated going on at a systemic level in this country, I hope that figure moves you a bit. With $57, you can not buy a house. You can not buy a car. You are not able to save for your child's education, and you are certainly not going to be able to retire on social security alone. There is a crisis in financial acuity among low-income individuals in this country, particular black americans. Building assets and savings are the foundation of escaping from an impoverished situation...if you can pass something on to your children, or give them some support as they venture out on their own, they are all the more likely to be able to provide more for their own children, and so on and so on. So what is the source of the disconnect? Why are whites in this income quintile able to put some money away or cultivate some assets while blacks are not? In this country, we like to ignore the role of family history in determining your future, and there was this tiny little thing called slavery, and when it ended, the government decided not to provide the newly freed slaves with any assets with which to start their lives. This present day $57 in assets shows that we haven't made very good headway in this country in helping overcome the detriment created by this American atrocity. This also brings me back to my quest for a car loan. Everything I know about finance and money management, I know from my parents. I benefit from the fact that my parents have a mortgage, have owned multiple cars, have Roth IRAs, invested money to help pay for college, etc etc etc. The "secrets" to financial success are held by the haves and never transferred to the "have nots." This stuff isn't taught in school....people learn money management from their families, and their friends and their friend's brokers. The role of schools and education in this process is minimal. At my (public) high school, the only class on personal finance was looked upon in a disparaging way and was seen as reserved for those kids who were going nowhere. They dealt with balancing check books but really went no further. The real deal with money management starts when you meet investment bankers....who wants a one semester class in high school when you can make friends at college who will work for Goldman Sachs? Even as the effects of this financial crisis continue to stifle the economy, and people seem to feel "sorry" for those poor i-bankers who aren't getting that year end bonus they are typically accustomed to, we seem to forget who is really feeling the pain here. I can still get a loan because my parents will help me. People in the lowest income quintile can't. In the process of trying to protect their limited self interests, banks have created a chokehold on the economy that is squeezing those who are worst off (who, by the way, tend to be the main force behind our consumption-driven economy, but let's just put that little piece of the puzzle aside for the moment) while those best off moan and complain about how things will never be the same. So I guess you can't have three BMWs anymore and will only be able to retire with one beach house instead of two. But the worst off among us, who never learned the skills of financial management and had no savings to speak of before this crisis hit are now in the position of having the same nothing they had before and even less ability to get the predatory loans they were counting on to make ends meet before. Wall street and those associated with it have a lot of work to do. But in the mean time, schools (particularly schools in low income areas, but really, schools everywhere) need to institute a comprehensive curriculum that really teaches kids about money and finance in a practical and meaningful way. This shouldn't be seen as remedial curriculum; it's a means of providing access to opportunities....and isn't that what education is supposed to be about?