the long view: scalable financial leadership (27 August 2013)

This week marks the fiftieth anniversary of the March on Washington for Jobs and Freedom.  It was the occasion that inspired Reverend Dr. Martin Luther King, Jr.’s historic speech originally titled “Normalcy, Never Again”, but now known as the “I Have a Dream” speech.  The coalition of radical activists who gathered that day in the nation’s capital transformed the federal government from an institution that defended inequality and poverty to one that shaped policy that pursued its highest principles – “liberty and justice for all.” 

These #August4Excellence columns have laid out a blueprint for achieving what the federal government did not over the last half-century.  They form the fundamental tactics for eliminating poverty household-by-household, community-by-community.  Thoughtful readers now have the tools that billions of people have lacked for centuries.  We have the opportunity to realize the full potential of democratic autonomy in both the political and the economic arenas.

When the Home Owners’ Loan Corporation institutionalized the practice of red-lining neighborhoods and evaluating a household’s creditworthiness based on the family’s ethnic background, it solidified the most pervasive and destructive economic judgments of the nineteenth century.  When the Federal Housing Administration adopted those guidelines as the basis for guaranteeing mortgage loans, it built the most racially segregated, industrial nation in the history of the world.  Even as suburbs and small towns multiplied across the country, the old patterns of inequality survived and deepened over the last two generations. Without a focus on capital investments, laws like the Fair Housing Act of 1968 and the Mt. Laurel court decisions of the following two decades were impotent against the intransigence of real estate and financial markets that were determined to maintain their traditional practices.  Worse, as the world economy adopted derivative financial tools at the start of the twenty-first century, the racial and ethnic assumptions about wealth and poverty gained camouflage from color-blind ideas about income, zip codes, and household spending.

The autonomy and authority of individual citizens – from every neighborhood – require financial tools that recognize the inherent biases in the field’s evolution and design. Microfinance allows for an increased possibility to include isolated families in the global marketplace. However, it does not offer a clear ladder for growth, even in its most successful locations.  Microfinance lenders need to work through more sophisticated markets like Norristown in institutions like credit unions.  Local credit unions with microfinance initiatives would partner with financially stable households that use the investment knowledge from last week’s column to grow new global enterprises.  Instead of the average 8-block area being worth approximately 45 million USD and a town worth nearly 7 billion USD, Norristown’s families would lead an economic development campaign that brought the average neighborhood value to 170 million USD and total local worth to 18 billion USD by 2025.  These plans and goals come from a system of scalable finance that prioritizes low-interest, responsible lending to households earning less than $200,000 a year in 2010.  Growing entrepreneurship among working- and middle-class families will achieve more liberty, autonomy, and freedom than the industrial jobs initiatives proposed by A. Phillip Randolph and Bayard Rustin in 1963.

Elon Musk recently proposed an idea called the Hyperloop.  It offers efficient inter-city travel over a distance of 1,000 miles or less.  The Hyperloop is precisely the kind of innovative capital investment necessary to provide new opportunities for scalable finance.  In the United States, movement beyond the Interstate Highway System will be the key to continued economic stability and revitalized growth for a new century.

Creative investors, however, will see a larger opportunity.

Consider scalable finance on a global scale.  Imagine replacing frequent air travel on the Pacific Rim with Hyperloops.  More importantly, consider intercontinental highway or rail systems that connect the economies of Africa, Europe, and Asia more efficiently.  As urbanization continues to accelerate and more people use computers to access the infinity of knowledge we create, expansive water systems and energy grids are essential to move civilization forward.  It is a 500 trillion USD opportunity, a chance to build a truly inclusive human civilization.

Let’s get to work.

Dr. Walter Greason is the Executive Director of the International Center for Metropolitan Growth and the author of Suburban Erasure: How the Suburbs Ended the Civil Rights Movement in New Jersey.   His work is available on LinkedIn, Facebook,Twitter, or by email (waltergreason@yahoo.com).

Author: waltergreason1

Public Figure.

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