Explaining why the racial wealth gap still exists

I asked Chat GPT to summarize and coordinate the messages of four books that explain why structural racism still exists. When talking to a lot of faintly progressive people, environmentalists who were moved by George Floyd, for whom economic justice isn’t often on their radar, I find they don’t know what redlining is. I asked AI to give me a primer, based on four seminal books.

I thought that maybe a summary of four books that explain the embedded systemic prejudice in fiancé, “The Color of Money in the legal system, The Color of Law,” the inequality in the valuation of real estate in redlined vs. non lined neighborhoods, Know Your Price,” and “Evicted are all influential books that address issues related to economic inequality, systemic racism, and housing in the United States.

Here are the similarities, issues addressed, and their real impact according to the ChatGPT

Similarities:

1. Focus on Inequality: All these books examine various aspects of economic and social inequality in the United States.
2. Systemic Racism: Each book addresses how systemic racism has historically and continues to shape the economic and social landscapes for African Americans and other marginalized groups.
3. Policy Critique: They critique existing policies and systems that perpetuate inequality and provide evidence-based arguments for change.
4. Narrative and Data: The authors combine personal narratives, historical analysis, and data to illustrate their points, making the issues accessible and compelling.

Issues Addressed:

1. Economic Disparities:

• “The Color of Money” by Mehrsa Baradaran explores the history of Black banking and the persistent racial wealth gap.
• “Know Your Price” by Andre Perry examines the devaluation of Black property and contributions, focusing on the economic costs of systemic racism.

1. Housing Inequality:

• “The Color of Law” by Richard Rothstein investigates the government’s role in enforcing residential segregation through discriminatory policies and practices.
• “Evicted” by Matthew Desmond looks at the housing crisis, focusing on the experiences of low-income tenants facing eviction and the broader implications for poverty and inequality.

1. Historical Context:

• “The Color of Law” provides a historical account of how laws and policies created and maintained racial segregation.
• “The Color of Money” traces the economic barriers faced by Black Americans from slavery to modern times.

1. Personal Impact:

• “Evicted” highlights the personal stories of individuals and families affected by eviction, showing the human side of the housing crisis.
• “Know Your Price” includes personal narratives and case studies that demonstrate the real-life impact of systemic devaluation.

Real Impact:

1. Policy Influence: These books have influenced policymakers and advocates by providing comprehensive evidence of systemic problems and suggesting possible reforms. For example, “The Color of Law” has been cited in discussions about housing policy reform.
2. Public Awareness: They have raised public awareness about the complexities of economic and racial inequality, encouraging broader societal understanding and dialogue.
3. Academic and Educational Use: These books are widely used in academic settings, contributing to the education of students on these critical issues.
4. Advocacy and Activism: The detailed documentation and analysis in these books have been used by activists and organizations advocating for social and economic justice, providing them with the necessary tools to argue for change.

By examining these interconnected issues from different angles—banking, housing policy, economic valuation, and the personal toll of eviction—these books collectively contribute to a more comprehensive understanding of the challenges and injustices faced by marginalized communities in the United States.

What I’ve learned from Will Ruddick so far

You can just make up a new economy. And it helps if what you make up mirrors ancient indigenous practices of sharing and mutual obligation.

We want to make up a new economy of reliable abundance through collective local philanthropic investment where the gift comes back to be given again. That’s why we are talking to Will Ruddick. We want to do something similar to what he did.

I’d suggest aiming for nested cooperatives, including service cooperatives to serve the coops as outlined in Assets in Common, the new book and model I am finding compelling.

If businesses arose they could be organized in stewardship trust like forms, to enable the mission to stay intact, with nested coops to distribute ownership broadly and for the resources to be shared in the pattern Industrial Commons and Poder Emma have demonstrated that it is a reliable generator of abundance for good. Couple that with regerative philanthropy, artesian well philanthropy, where the gift comes back to be given again. Then you could build future focused infrastructure since you have reliable abundance coming back regularly you can plan around into the future. And they’d follow the existing models that have figured out how to pool and share resources with other people building similar economies based on reciprocity. 

When building new economies, you should build in reciprocity and mutuality now, before climate change forces into that kind of cross sector collaboration for our mutual survival.

What I want to tell Will Ruddick, 1.0

Will Ruddick is the most creative mad genius economy builder I know. He works in rural sub Saharan Africa on community finance. Sarafu, the currency his Grass Roots Economics has created in Kenya is a model I find compelling.

And his many paths of stories, using bowls with beads, cartoons, videos, scenarios, stories from history, is a real model for explaining a new way of acting that leads to a new way of thinking, which leads to community wealth creation. That is what we will need to do here for the philanthropic investment funds we are working to become embeded in the community around Asheville, NC, with an emphasis of the Swannanoa River Watershed.

He has created a currency with amazing levels of adoption, tens of thousands, that causes people with few Kenyan shillings, to, using mutual obligation vouchers, create a thriving community where sharing and the realization of the abundance that is around us makes it work. I have my first talk with him scheduled for this coming Tuesday.

Here is what I want to tell him. (This blog will be updated as I think of more or edit some of what’s here now).

Stephanie Swepson Twitty and I want to create viable examples of what this new Catacap Donor advised fund platform can do working through the Watershed Fund, led by Eagle Market Streets, a Black female led CDC, in partnership with Neighborhood Economics, which does community engagement through convenings. We are currently working with a local college on a broad spectrum of nature based entrepreneurs and we are working with a local non profit to unlock Biden’s climate money. Below is a picture of how the donor’s dollar comes back to be given again on the CataCap platform that we are piloting in Western North Carolina.

And then there is our project that has raised more than $ 2 million, the Community Equity Fund which is a replicable model that enables the 90% of African American business owners that are sole proprietors to become job creators. And once they repay the Equity Fund the sole proprietors turned job creators are able to pay the high cost of a CDFI or even commercial bank loan to grow further, perhaps a loan here at Mountain Biz Works, our great local CDFI.

Now, thanks to Catacap, individual people can invest in the Black and brown entrepreneurs in the Community Equity Fund, but instead of the fund payments going back to Eagle, they come to each donor’s donor advised fund.

You can get a donor advised sub account at Catacap, for as low as $250. It becomes part of CataCap’s group donor advised fund at ImpactAssets. Working with Eagle we have lowered the amount needed to have donors aggregate in order for Eagle to make individual underlying investment of $5,000. 

Working with Eagle we have lowered the amount you need in order to give to invest to $5,000. So this is a new financial instrument that is targeted at groups where it takes several people to come up with $5,000. Nothing new and innovative like this was perhaps ever targeted at that people with so few dollars. That’s in line with our design principle to enable more community control of community investing.

Now that the Equity Fund has been around for three years, we want to talk about the impact of those philanthropic investments; when the equity investment is paid back to the Community Equity Fund by the formerly sole proprietor. She is now a job creator who’s ready to let her business grow at its natural pace. The Community Equity Fund plays the role of the missing rich uncle or aunt to get them to that point, who would have provided friends and family money. The friends and family gap exists because of a lack of intergenerational wealth.

We want to talk validation: CEF has now been in the Buncombe County budget for the second year and it is the lowest cost job creator in the county, at $12,000 to $15,000, lower than credit unions or CDFIs or banks. The county measures us on four things; how many sole proprietors become job creators, how many jobs are created, what’s the growth in income for the investees, and what’s the growth in income for the aggregate (all jobs are living wage).

But more than anything we want to track how people behave, individually and in the giving circles that hopefully pop up, how they deal with regular doses of giving coming back and continuing to come back. We think this new tool could greatly increase the flow of capital to good.

And of course several of these local experiments on the Catacap platform will likely show up to tell their stories at our Neighborhood Economics regional conference focused on entrepreneurship in November. Our national conference will be in Chicago in the Spring with the MacArthur Foundation our anchor partner.

Moving through resistance

There needs to be a chapter on moving through resistance in town government, schools, community, and the dominant paradigm. How the Catfish industry changed the perception of the fish, how investors got over two pocket thinking to create impact investing. We can also show how the institutions can become supportive anchor institutions.

Two linked issues are coming to the top as themes: Our work to gather the innovators with platforms and funds and solutions causing asset creation by folks who don’t have them.

It will be important to be able to be allies across race class and zip codes, around a bioregional climate response that includes food, but also transportation. Helping allies connect with and be allies to under resourced neighborhoods is a key goal.

Having redlined neighborhoods not be economically vulnerable is going to matter to the rich people up the hill as climate change comes to the fore in the next 20 years. This I guess has a 20 year time line for creating a viable economy of the neighborhood that works for the zip codes where people die 10 years younger and the air is polluted and it often a heat sink because redlining meant that their property values are not high enough for their taxes to support sidewalks and tree lined street. And they have been subsidizing rich neighborhoods with their property taxes but that can be fixed, ala Joe Minicozi.

Networks of coops

Some people would start a book by an outline. I am going to start by listing chapters I want to write about.

The thing I am most intrigued about right now is the topic of Zoe Schlagg and Derek Razo’s new book about how networks of coops, like Poder Emma, and the Industrial Commons over in Morganton, and Ujima are clearly the most efficient relational structure that create the most community wealth for all faster than any other model.

Other chapters would be about innovative housing solutions, focusing on work force housing rather than affordable; that’s a crowded area. We would focus on innovative solutions that go around the cumbersome government driven models. And community owned commercial real estate. The land back movement. Community inclusion currencies like Serafu from Grassrootseconomics.

And giving to invest to create a movement of ally engagement that lasts over time.

The economy of the neighborhood

I have decided to see if I can start seriously working on a book about the work Rosa Lee and I have been doing for the last 18 years, helping to create the field of impact investing, and walking away from where that market went to people that the SOCAP market would never reach.

I think i will call it The Economy of the Neighborhood.

A focus will be. 1. A need for collective bioregional climate response that means barriers of zip codes, and prejudice are not contributing to our survival

1. Capital has to be handed down to the people with the problem, and they need to be able to create assets. This is an environmental necessity.

Start from the climate. Everything I do is underscored by how hard it’s going to get, and we need to learn to pool and share resource, and see the abundance things like networks of coops create. 

Books are serious things. They require time for thought and rewriting and more research.

One thing I am excited to write about is the network of coops that Zoe Schlagg and x’s new book points out is the fastest way to grow significant community wealth. This is just a cautious, I’m here, by the bookasprojectthathappens.

Engaging with Warren Wilson

Though I have said I am moving out of operations and on to special projects for Neighborhood Economics. Moving from operations (I managed the content, Rosa Lee managed the business) to advisory status. But it seems I am still needed in operations around shepherding and recruiting partnerships around specific collaborations for a purpose at a point in time. I just got to do that with the mashup of Eagle Market Streets CDC portfolio of philanthropic investment funds and the new Catacap platform from Impact Assets.

Catacap greatly democratizes the ability of small groups of people, Sunday School classes, Rotary Clubs eighth grade environmental science classes, people who want to keep the county from closing the library and only gathering place in their rural area.

Rather than needing a minimum of $5,000, Catacap lets you set up your own persona philanthropic, give to invest investment fund for only $250. But at Catacap, you need to gather $25,000 to be able to make a philanthropic investment in a for profit business you believe in or in a zero interest loan to a non profit. Working with Eagle Market Streets, we can get the money out on the street and to heal the problem for only $5,000. This is designed for groups that need several people to join together to reach $5,000. I doubt that any innovative financial platform has ever been designed for a demographic with that little money. This is economic power delivered to poor folks. If they are a non profit with a donor base, their donors will get their gift back to give again if they find a small capital expenditure that will pay off patient, low cost, flexible capital willing to go in early; all the characteristics of what the MacArthur and other foundations defined as catalytic capital but done at the grass roots level with no program officers theory of change to tell the people what to do. This is cheap, accessible capital that is designed to cede control in the way we are using. And of course each investment will be reviewed for feasibility by Eagle’s experienced investment officer, Steven Lawrence. And Stephanie and Jazmin and I will be involved with the first deals

It gives cutting edge economic power to the grass roots. And we, me representing Neighborhood Economics as a convener, working with Stephanie Swepson Twitty, my long time partner who leads Eagle, accompanied by her new community engagement whiz Jazmin Rogers, have made what Catacap has done; greatly reduce the cost to set up your own personal philanthropic investment fund that resides with Catacap at a foundation. You get a standard tax deduction and then you get to invest in for profit companies with a mission you believe in, or you can lend to non profits, at zero interest, paid back by revenue share or similar method.

I am setting up all the funds I am working on to be consciously anti usury; don’t use interest, if you can avoid it. Find other ways for the loan to be paid back. Interests puts the rights of the investor ahead of the entrepreneur in a way that is extractive. Interest is the core principle of what makes an extractive economy, it’s the historical inflection point where money was granted more weight than it should have and the rights to get investor money out first, even when they invest in coops and don’t take have a vote is still wrong. Getting your money out first is a form of interest, according to the Somali imams I got to know a few years ago when I was working with Somali’s to create a no interest housing corporation that was a version of a hybrid coop. Unfortunately covid hit two weeks before we would have had a multi mosque feast to launch it. And then our CEO got poached by the U.N.

But in that time, I realized the imams and islamic investors and thought leaders I was talking to were able to have a much more trust anchored relationship with their investees, because they were not going to put the cost and power burdens of interest on their investments. It is a cleaner kind of finance. There is a reason Moses said usury was a sin. The things i am going to build, because it seems

I am going to keep building the new stuff that doesn’t exist yet, but should so 1. I am going to keep coming up with ideas that need to be built into new kinds platform that deliver economic power to folks who mostly haven’t had it And that I will be in this one sub set of operations 2. When you require a specific set of partners to enable something new to happen that is adds to what already exists. I am good at the first emergent mini phage stage of an economic platform; the first deals that add to each other easily; I can see those faster than others. The pattern they would fit in in what, it just became a bit more clear, needs to be built. I am not building from design. I am building from what looks like the next thing to do.

And so for that space, until I got Ken Kurtzig the Catacap CEO who’d been hired by my long time business partner Tim Freundlich who co founded Socap and led our impact fund, Good Capital and owns part of Neighborhood Economics to vette the entrants, to agree to ask Tim if our previous deal, struck before Ken was hired, was intact. It was, and the operators have stepped in and my agency has been evaporating in this deal around the equity fund.

They said yes, Steph said she and Jazmin, her community outreach person, who also does some marketing, will review and edit my draft of our investment page on the Catacap site. We will have an investment page in a few days. And I am doing none of it, but they are using my draft. It wouldn’t have happened without me pushing it, but now its in the hands of operations. I suck at operations. This is my typical pattern, btw, birth an idea, find a partner who can bring to life, hand it off. And on the Community Equity Fund once it gets on the Catacap marketplace, I will be making some school and church connections.

I am feeling really called to what could emerge at Warren Wilson. The rights of the river group is interested in that as a path forward for rights of nature, incorporating the college entrepreneurs and their gigs into a network of coops, with the whole being in an intergenerational steward form of trust that can have a business operate like nature has rights. As B Corps showed changing the operating agreement of a business, which is at the heart what B corp does, changes the relationship of the business to the world. This is just another step down the path of a relational economy. Reciprocity, interdependence, coordinate climate change response on a bio regional basis and part of a watershed. 

The easy path to climate money is a good story I need to get out. Will work on that next week.