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I was raised one and two sentences at a time, my father’s clichés serving up life lessons at the kitchen table, after baseball practice or on the way home from school. He didn’t have the patience for long-winded lectures and couldn’t find his voice after biting his tongue at work — this was all he could muster in his attempt to keep me alive.
He used to tell me that there are two types of thieves: the ones who break into your house and steal your TV set, and the ones who convince you to sign on the dotted line. Understanding contract law with institutional impediments is a bit heavy for a 12-year-old; this would take years to unpack.
Recent events have shed light on the wealth gap that left Blacks on the short end of prosperity as we collectively stagger through an economic crisis that impacts all demographics. To be clear, nobody wins from a contest of sorrow, and most would agree that obstacle measuring is a dicey proposition, but this signature on this contract is what it would always end up being.
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The basic tenets of capitalism include access to capital, fungible assets, being paid according to what the free markets are willing to bear and the enforcement of contracts. Suffice it to say, slavery and Jim Crow prevented fair wages.
Let’s remember that Black police officers in Georgia couldn’t participate in the state pension fund until 1976 and the Social Security Act of 1935 excluded farm workers and maids when 65% of Blacks down south were farm workers and maids — our piece of the pie repeatedly gerrymandered.
Blacks were three times as likely to get a subprime loan during the housing crisis when compared to white borrowers with the same credit rating. Nobody would make a reasonable argument that we have equal access to capital.
An asset is fungible if it is valued the same way as similar resources, and since Black homeowners were red-lined — denied access to federally backed loans — into the late 1960’s, one can imagine that not all real estate wealth was created equally.
To the extent that we, the citizens of this great nation, believe in the system of capitalism, the School-to-Prison Pipeline has made its way to Capitol Hill and incarcerated the free markets. The Federal Reserve has famously kept interest rates artificially low and inflated asset prices with fake money not backed by anything of value.
This prompted companies to buy back their own shares with borrowed money that represented 100% of all net new purchases in the stock market since the last financial crisis, since the last time the middle class lost their homes and Wall Street continued to receive their bonuses.
The enforcement of contracts speaks to the rule of law, even as the Federal Reserve has willfully violated the spirit of the Federal Reserve Act of 1913 by purchasing corporate bonds to serve as a synthetic bridge loan to mismanaged companies who spent their emergency reserves enriching themselves with stock-based compensation.
Go tell the small-business owner who put his house on the line and lost everything about the free markets, about the unlimited credit facilities he didn’t have access to, about how the government doesn’t pick winners and losers, about the perils of socialism.
The free markets have not been kind or, in some cases, available to Blacks but, as fate would have it, that same sordid contract they convinced all Americans of all hues to sign is looking more and more like a really bad deal. After all, only 55% of Americans even own stocks, with the largest portion sitting in retirement accounts that include pensions that are woefully underfunded.
The average American is banging on their calculator as if it were a grand piano trying to make this math work, adding up rising college costs, unstable job markets, the end date of a temporary mortgage forbearance and the unemployment benefits that only 30% of filers have even received.
The sum total suggests this was all bound to happen sooner or later, and that any good thief will steal from anyone he can get his hands on, if he can get away with it time and time again.
Or, as my father would say, read the fine print.
— Ivory Johnson is the founder of Delancey Wealth Management, LLC and a member of the CNBC Financial Advisor Council.