Reviving the Inner-City Economy

Urban America, a term almost synonymous with minority and black America, is in crisis. That comes as a surprise to no one, of course. Urban life, inner-city life more particularly, is fraught with perils and starved of opportunity. Many of the themes of these crises are well known to us: high rates of crime, low rates of employment, inadequate access to healthcare, contentious relationships with police officers and governing authorities. The list goes on and on. Solutions to these crises however are not often easy to come across, so let me present a few here.

That an absence of broad-based economic opportunity is fundamental to the struggles of the urban centers of America, whether we are talking Detroit, south-side Chicago, or my own inner city Los Angeles, is hard to argue. Lack of income and financial independence is central to the instability of families and the unraveling of communities. Travel my home streets of Inglewood, Los Angeles and Watts, and in the midst of those who are making it okay, we find depressed and itinerant people struggling with an overburdened public transportation system, unkempt roads, a polluted environment and worn commercial properties serving as the ailing backbone of an economy tenuously held together by EBT.

How to fix the employment crisis? Reforming welfare and unemployment spending to couple these dollars with educational programs and occupational training that can turn the long term unemployed from frustrated recipients of government assistance to skilled and qualified students and trainees is a good place to start. Our current welfare and unemployment programs do little to provide for successful transitioning from dependence to employment. Many people who receive unemployment remain on unemployment for a long time, and by the time their benefits are near discontinuation  they find themselves seeking employment with an unattractive gap on their resumes and a lack of confidence that comes from not having participated in the workplace for an extended period. All of these things plague the inner city unemployed, making them undesirable to employers. Welfare and unemployment reform along these lines would go a long way to solving these problems.

A long way, that is, but not far enough. For while it is vital to incentivize education and training these things can only help black and inner city communities take advantage of the broader opportunities available to them. But if jobs are not prevalent in the inner cities, and they are not, than the urban population has to seek opportunity where it lies, and often it lies very far from our homes in the cities. That requires travel, and because gas is expensive and many poor blacks and Latinos do not have cars, we are left to rely on public transportation systems that are often underfunded, overcrowded, unpleasant and even dangerous. Funding public transport systems whose routes are effectively coordinated to deliver people from the cities safely, comfortably and expeditiously to those areas where job and career opportunities are prevalent is important. This would make it more possible for the unemployed to find jobs, to actually be able to get to those jobs and to get to school and daycare as well. Ultimately, as these measures enhance urban economies these municipalities would have more tax dollars to invest in the communities as a result.

While there is not room here to give a detailed account of the inadequacies of inner city healthcare, both in terms of access and quality, as a fundamental principle it is clear to me that the more we can expand competition between providers, the more affordable care will become a reality for people everywhere, including the urban communities. One step in that direction would be to do as former President Bill Clinton and others have suggested, and allow insurance companies to compete across state lines. Certain features of President Obama’s Affordable Care Act will also help to expand access, such as mandating the coverage of people with pre-existing conditions and extending the time children are available to remain on their parent’s plans. Other elements of the ACA however, including coverage mandates, threaten to raise costs and thereby limit access. On the local level then it is important for community groups to do what they can. (The First Ladies Health Day in Los Angeles, sponsored by Walgreens in association with a wide range of inner city churches, is bringing a diverse array of healthcare services to the urban poor in Los Angeles. It’s a great example of what the community and the business sector can accomplish when working together.)

The inner city suffers from many problems; but a healed economy is the first step in solving many of them. With the right policies in place, inner cities across America can be transformed into citadels of opportunity, empowering black America to take the reigns of its own economic future.

The Oprah Illusion: The Reality of OWN

Just because you rise to head an army, does not mean you’re part of the power system. – Amos Wilson on slave generals

As the launch of OWN came on New Year’s Day it seemed that a number of worlds were a buzz and all for very different reasons. The cable world was a buzz as it wonders if the “Oprah Effect” can help it continue to close the advertisement revenue gap that exists between cable and broadcast channels. The battle for advertising dollars currently sees cable companies getting only 39% of the advertising revenue pie. African America was a buzz because finally our shining star of wealth would be finally in possession of her very own network. The hope by many is that we will see positive images of African Americans and especially African American women, which is something that we all agree is sorely lacking in America’s mindset and our own community. This, after all, is the beauty of ownership – you get to dictate what your company puts out. But that is assuming you have not just an ownership stake but majority or controlling ownership. We were told this is Oprah’s Network so she must own it all right? Well, not exactly. Unfortunately, this is where our lack of financial literacy at times gets us in trouble. Technically, I own Disney but then again so do a lot of other owners of Disney shares. My say so in the direction of Disney is equal to that of my ownership stake. This leads me into the illusion of OWN.

Let me point out a few things. The first and probably most important thing is that this is a partnership between Oprah & Discovery, a 50/50 partnership at that. Discovery ponied up the $200 million to kick-start the infrastructure for the network, which was previously Discovery Health, so unless the big O finds a way to gain another percentage point in ownership, she will not have absolute control of the network without first having to check with her partner. Discovery will have equal say so in programming and all other things as it pertains to the OWN network. The appointing of an African American woman CEO might have been more symbolic for appearance sake than anything else. Not saying this is the case but with the CEO being the most public figure after Oprah herself, if one wanted to keep up the notion that this is indeed “Oprah’s Network” then this is a good move. See Sun Tzu’s Art of War.

We see similar cases of strong and silent European American influence over perceived African American controlled media. Like BET, who unknown to most of us until the sale had a large shareholder in Liberty Media who held a 33% stake in BET giving it quite a large say so in the direction of the company. Another African American perceived owned outlet is TVOne. It too is not majority owned by Radio One but a partnership with Comcast. In this instance it is highly likely that Radio One is actually a minority owner (given its financial state – market value of Radio One is $65 million versus Comcast $63 billion) and Comcast the majority.

Oprah’s company ironically could be one of very few African America’s businesses that creates voluminous amounts of capital flight out of the European & Asian America groups into African America. In the way that Arab & Asian stores create capital flight out of our neighborhoods into their own by the stores they own in our community. Far more money is going out of African America than coming, even with Oprah. On a more macro level capital flight is currently happening from the European Diaspora into the Asian Diaspora (primarily China & India). These same principles apply here on the micro level within the country community to community.

My concerns about OWN are a bit more long-term. Is this network sustainable into another generation after Oprah passes?African America passes few generational assets along. None will be bigger than Oprah’s estate at the moment. Her estate could mean major windfalls for African Diaspora institutions here in the U.S., Africa and the Caribbean, which is a circulation of our global dollar – something we are sorely lacking. But again, is there a market for OWN or Harpo Productions without Oprah herself as the primary asset?

On a social level, it is hard to put much of any social value on the network for African America or African American women. Notice I said the network not Oprah. There is only one thing that European American controlled corporations like more than profits and that is power. Companies have been known to take losses on products just to control the market share of a product and drive competitors out of the space. John Rockefeller was infamous for this in maintaining the oil inventory under his control in early 20th century and in more modern times we’ve seen DeBeers use this same ploy to control 85% of the world’s diamonds.

Power to control the social capital of the society in this case is no different. In order to do so they must maintain the status quo of where an African American woman’s value is in the society. This despite African American women controlling $0.85 of every $1.00 in African America’s $913 billion buying power pie, the second largest buying power of any ancestral diaspora in the U.S. trailing only that of European America (although Latino America is on the verge of surpassing us). The danger of allowing African American women to gather social capital is that African American women are more than willing to fight for the survival of the African Diaspora than many in society would like to give them credit for. They have and continue to fill the void of African American men being swept away by the system through abnormally high death rates, incarceration, and poor education. Thus they provide the “doggy paddle in an ocean” for survival of African America as we continue to try and right our ship. Dr. John Henrik Clarke said it best “Powerful people cannot afford to educate the people that they oppress, because once you are truly educated, you will not ask for power. You will take it.” This is the crux of social capital and thus, with African American women controlling the economics of African America they too must be kept in their place for they pose a threat to those who control the society. If you control the society you control the economics and politics of it as well. One of the most powerful parts of social capital is a positive view of images of oneself and because of this we must realize why Oprah potentially does not have majority control of her own network.

But there is hope. This is the beauty of the stock market. If we want to influence the programming on OWN then buy shares of Discovery Communications, Inc. (Ticker Symbol:DISCA) and establish an African American & Diaspora ownership block. You would not only have influence over OWN but of all of Discovery’s assets. In the past I’ve made this same suggestion for buying Disney shares, as they are the owner of ESPN, which makes it revenue primarily from sports where the labor is predominantly African-American. An owner’s gripe that is invested in the company goes a lot further than just a gripe from the crowd.

Follow the money and power. The decisions, people, and institutions tend to explain the reality of what actually is rather than the illusion of what is presented.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & CEO of Sechen Imara Solutions, LLC. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as a contributing author for a number of African American media outlets.