African-American adults answered 38 percent of questions correctly on the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) compared to 55 percent of white adults, according to a report by the Teachers Insurance and Annuity Association of America.
Operation Hope founder John Hope Bryant and Bishop T.D. Jakes discussed financial literacy at the annual Hope Global Forums, held Dec. 11-13. Bryant’s Operation Hope produced the forums. They were joined by Dan Schulman, president and CEO of PayPal; Tony Ressler, principal owner of the Atlanta Hawks and executive chairman of Ares Management; and Doug McMillon, president and CEO of Walmart.
Bryant and Jakes have joined with big corporations to push financial literacy for Black America. But is that that really the biggest problem for Black America?
Reparations advocate William Darity Jr., a professor of public policy, African and African American studies, and economics at Duke University, has long said that financial literacy definitely is not the biggest problem for Black America.
He and fellow economists Darrick Hamilton argued in papers for Duke University and the Federal Reserve Bank of St. Louis that the push for greater financial literacy as a solution for America’s widening racial wealth gap is a “commonly offered” myth.
“The gross overemphasis on financial literacy is symptomatic of the same internalized racism that says black folk shouldn’t get monetary payments as reparations because we’ll spend it foolishly,” Dr. Darity told Moguldom.com.
He noted that other expects agree. “A number of commentators/researchers, including yours truly, have made it clear that the Black-white wealth gap is not due to black folk’s inability to manage a portfolio. We typically have no portfolio to manage,” he pointed out.
Financial literacy cannot work alone, Darity stressed. “Giving someone financial literacy training without resources is like giving someone a recipe when they have no ingredients,” he said, and added, “That said there is no evidence that, at a given level of income, black folk are less financially knowledgeable than white folk.”
Reparations are the key to closing the wealth gap, according to Darity.
“What’s ‘adequate’”‘ in terms of resources? At least an amount sufficient to bring average Black wealth up to par with average white wealth, i.e. about $350,000 more for each Black American descendants of U.S. slavery,” Darity explained.
He continued, “No one has ever shown how greater financial literacy will get Black American from here to there when a group that constitutes 13 percent of the population and only 2 percent of the nation’s wealth. Wealth begets wealth. The more you have, the more you can accumulate. Black folk can’t catch up merely by learning more about the magic of compound interest, particularly since white folk, with much more at baseline, also have access to the same information. In fact, there’s no behavioral change Black folk can undertake independently to close the racial wealth gap.”
Additionally, Darity noted that financial literacy is “not consistently protective of wealth building anyway. No one has said the large number of investors defrauded by Bernie Madoff were financially illiterate.”
He said, “Financial illiteracy is at most of a tertiary order of wealth importance in explaining the black-white wealth gap.”
But during the forum, Bryant promoted financial literacy and something he called “silver rights,” a term he coined to describe the economic empowerment of minority and low-income communities.
“I don’t know about you, but I’m sick and tired of being sick and tired,” Bryant said. “Our goal is that by the time your kids grow up, financial literacy is in school — kindergarten through college — as a requirement so that everyone learns the language of money.”
In 2021, Operation Hope launched Financial Literacy for All, a joint initiative with businesses such as Walmart, Bank of America, Disney and many others.
Bryant is the founder, chairman and CEO of the nonprofit Operation HOPE, which provides financial literacy empowerment and economic education to youth and adults. The nonprofit has committed to creating 1 million new Black-owned businesses by 2030.
Jakes is the bishop of the nondenominational Dallas-based megachurch The Potter’s House, and a strong advocate for real estate investing. Jakes’s church services and Evangelistic sermons are broadcast on The Potter’s Touch.
“Home ownership is my Bible,” Jakes told CNBC before the Forums event. “You can accrue wealth in an appreciating asset.”
He added, “The problem in our community is we are consuming depreciating assets. The young people today are not interested in homeownership because they want mobility. We are not trying to fix you so you are immobilized, we are trying to fix you so you are empowered economically and aggregate wealth to pass to your children.”
The Operation Hope founder has long stressed the need for Black Americans to embrace capitalism.
“I grew up in Compton,” Bryant told CNBC. “Without capitalism and a banker teaching me financial literacy at 9 years old,” Bryant says, “I wouldn’t be who I am.”
The racial wealth gap remains a major issue and has continued to grow. The average Black household earn about half as much as the average white household and own only about 15 to 20 percent as much net wealth, according to the U.S. Federal Reserve. Jakes and Bryant stress that increasing financial literacy in Black America would help close the gap. But according to 2021 article in Fortune, the “financial literacy gap doesn’t exist.”
The article concludes that the narrative that financial literacy would help help Black people make better financial decisions, and more wealth would follow. But the article stresses that The “supposed financial literacy gap doesn’t exist. Kids across the income spectrum have similar levels of financial knowledge, but that knowledge doesn’t put money in the bank for low-income kids, and it won’t fill the United States’ approximately $14 trillion wealth gap.”
T.D. Jakes (L) speaks to a crowd of nearly 10,000 in Charlotte at the International Leadership Summit, hosted by global leader and conference founder T.D. Jakes. Apr. 01, 2022 in Charlotte, N.C. (Bob Leverone/AP Images for T.D. Ministries)/ John Hope Bryant (R), Hope Global Forums website. https://hopeglobalforums.org/