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Wall Street and Jesse Jackson

Mises Daily: Thursday, May 10, 2001 by

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Ticker-tape paradeSome people and firms in the securities industry are cooperating with—or, should I say, surrendering to?—Jesse Jackson and his "Wall Street Project," which pressures corporate America to adopt its own reparations program. The phenomenon reminds me of the aphorism attributed to Lenin: Capitalists will sell the rope by which they will be hanged.

Having acculturated themselves to race quotas, many in the business world are prepared to go along with whatever reparation measures the race industry dreams up, even if they are manifestly unfair to stockholders, employees, and consumers. And just like affirmative action and quotas, there is no end game; the programs are instituted to last to the end of time.

What’s more, the Wall Street Project is not even a government program. True, the kickoff party in 1998 was attended by then-President Bill Clinton, Fed Chairman Alan Greenspan, and then-Treasury Secretary Robert Rubin. But cooperation with the program was entered into voluntarily by various securities industry organizations, including trade groups like the Securities Industry Association and some of the biggest brokerages on Wall Street—Sanford Weill of Citigroup and New York Stock Exchange Chairman Richard Grasso among them.

Will their cooperation with the program, or even the expansion of it, end the criticism of people like Jackson? Forget it. We are now four years into the project. Many supporters are unhappy. Jackson had rough words for Wall Street as well as the financial markets and capitalism in general in the March issue of Traders Magazine. He contended that only one downtown building in America is owned by an African-American. "That’s classic economic apartheid," Jackson said.

Apartheid was a state-imposed system in South Africa, another case of massive social engineering run amuck. Thankfully, this system has been dismantled (though the reverse discrimination of the new regime is no better). One should remember: the Apartheid was a government system, not one created by the private sector.

But here in the United States, how is Wall Street practicing "classic economic apartheid"? What law in the America of 2001 stops anyone—black, white, or otherwise—from buying an office building, downtown or otherwise, or a securities firm?

Tens of millions of American blacks—and, by the way, given the prodigious mixing of races today, just what is black and white isn’t always clear—are highly successful today. Many prosperous blacks can buy buildings, but no one, including Jackson, should tell anyone—individually or collectively—how they should spend their hard-earned and heavily taxed money as a way of correcting "past injustices."

But let us remember that Jackson is aiming at more than buildings. In the Traders Magazine article, Jackson called on Wall Street for "a balance of trade." This, of course, clashes with others who believe in the ideas of Samuel Smiles, a Victorian philosopher who believed in a tradition of self-help. Richard Cobden, a nineteenth-century radical MP and a contemporary of Smiles, captured this spirit when he said that he wanted to "inculcate in the minds of the labouring classes the love of independence, the privilege of self-respect, the disdain of being patronized or petted, the desire to accumulate, and the ambition to rise." Cobden was talking about the poor of England in the 1840s, but he just as easily could have been talking about any group or person. Still, Jesse Jackson apparently prefers to have minority groups "petted."

But many "minority" leaders and intellectuals today do believe in the self-help philosophy—a philosophy of not depending on avuncular white liberals or a paternalistic government. Among these thinkers are Walter Williams, Shelby Steele, Thomas Sowell, and Tony Brown, usually not among the darlings of the big media.

This philosophy of independence is detailed by Tony Brown in his Black Lies, White Lies: "Blacks must stop waiting for whites to rescue them. They must take charge of their own economic development."

Brown warns, "It is imperative that Blacks take that responsibility and that they become economically competitive through their own initiative. White people are not going to do it for them. It is time we set White people—and ourselves—free of that expectation." Brown, an entrepreneur, is an opponent of "entitlement socialism."

Nevertheless, Jackson, who seems to fancy himself a self-appointed Grand Inquisitor, believes it is time that Wall Street paid for past crimes. And he believes he should be in charge of who gets what. He wants a virtual veto over corporate management (affirmative action in the boardroom). At his Wall Street Project site, Jackson complains that "there is a multi-billion-dollar trade deficit between corporations and minority consumers."

And just how is this to be corrected? Wall Street firms must "hire and promote more minorities. Name more minorities to corporate boards. Award more business to minority companies." So says Jackson.

But, of course, all these demands beg the question: What is the ultimate goal? What is the correct number of minority firms or minority representation on boards of directors on Wall Street? Should the number match the percentage of a group in the census? (This is a ridiculous concept, since the census is such a flawed document and any use it has is outdated by the time the information is accumulated.) And, in the spirit of Jackson, shouldn’t some self-appointed avenging angel be correcting the "deficit" in those areas in which nonminorities are underrepresented? (Why can’t a pot-bellied, over-the-hill white guy like me play for the New York Knicks?) 

The goal of massive social engineering to ensure racial justice on Wall Street or in any other industry—whether carried out by a government agency or by private groups led by people like Jackson—is a ridiculous one.

Years ago, economist Thomas Sowell pointed out the futility of the task. In Civil Rights: Rhetoric or Reality, Sowell wrote:

Even if the various racial and ethnic groups were identical in every other respect, their age differences alone would prevent their being equally represented in occupations requiring experience or higher education. Their very different age distributions likewise prevent their being equally represented in colleges, jails, homes for the elderly, the armed forces, sports and numerous other institutions and activities that tend to have more people from one age bracket than from the other.

Given the government’s massive ability to harm our lives, our culture, and our wealth, let’s admit it: We often give in to the mere threat of the charge of racism in the interests of being able to fight another day. But why do businesses surrender to someone whose main claim to power is that he can obtain the immediate attention of many credulous media flunkies? Do securities industry officials actually think cooperating with the Wall Street Project will buy them peace?

Jackson, as a stockholder, is entitled to try for any or all of these things. And indeed, he has obviously achieved a fair amount of success by threatening to taint firms with the charge of "racism." But should Wall Street trade groups and firms pay for or endorse this? The noose is always ready for useful idiots who forget history.

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Gregory Bresiger, a writer and editor for Traders Magazine, has written for The Free Market as well as The Journal of Libertarian Studies. See his archive and send him Mail