Can we solve income disparity among minorities with social equity?

Have you noticed that the fundamental error of racial equality is always more government resources? Don’t get me wrong; there are laws that we need to pass to eliminate racial inequality within our nation. However, that only fixes a fragment of the problem, and while this might be hard to perceive, the real issue isn’t education, President Trump, or any political leader.

It’s important to mention that there will always be people who disagree in some form and for whatever reason, and that’s okay. Freedom of expression is every American’s constitutional right.

That being said, have you ever asked yourself why only a few minorities succeed and why others don’t? We all know that minorities are at a disadvantage beyond wealth, but we don’t always know why. We know that simply giving us money or resources has been an important step, but should more donations and resources always be the solution? At what point do we change the narrative?

At any of my startup companies, if we continually threw resources at a problem and had little to no improvement, we’d be out of business. To avoid that, we use a form of logistic regression assumptions. This means that based on the variables set forward, did we fail or pass? We then set up timelines and measure them for our desired outcomes. If we see no improvements, we try something completely different! While this is hard to do within general society, it’s something we need to consider.

If we all took a moment to explore Congress.gov and searched and read any number of bills related to racial inequality, we’d all be surprised. If you look, you’d see that we’ve come to a pivotal time in history. It’s not because of anyone’s political administration, but combined efforts over the last 20 years.

I want to be clear that my thoughts on this issue have been influenced by the movement to reduce Income-Based Disparities in the US. The purpose of this blog is to provide context around how we can create a robust and local economy for dominant minority communities.

So, how do you build a local economy? Well, five fundamental public policy principles can guide any city to economic development:

1. Encourage economic self-sufficiency through local ownership and maximum use of local resources. In other words, do what you need to do to get companies to come to your city and prevent companies from moving away.

2. Equalize the benefits and burdens of growth.

3. Leverage and recycle scarce public funds.

4. Ensure participation by minorities who usually excluded themselves from political and economically mainstream activities.

5. Nurture a robust “third sector” and “fourth sector” of nonprofit resources and private for-profit organizations.

So why is it harder for any minority-dominant community to practice those five principles? Well, what most people don’t completely understand is that minorities lack financial and social-based infrastructure, and without foundation, it’s nearly impossible to succeed.

In predominantly white communities, it’s common to find plenty of family and friends ‪who are successful. I like to refer to this as social birth assets that I group into their social infrastructure or social equity portfolios. Those people offer unnoticeable opportunities to their communities, and thus, social equity plays a tremendous role in shaping a society. Unfortunately, in minority-dominated communities, we traditionally lack social infrastructures and or social equity. Instead, we have social security, and I don’t mean literal ‘welfare.’ I mean, we’ve naturally learned just to survive, but not always evolve.

In other words, predominantly white communities traditionally have all of the five public policy principles described above. On the other hand, minority communities usually consist of general security and have little to none of the public principles mentioned above. One not only helps a community stay alive but evolves as well. The other helps a community ONLY remain alive at the bare minimum.

Even though I am referring to white communities a lot, this is not about race. It’s about asset-based involvement, and naturally, white communities having more assets and thus have a more significant impact for a better future.

We’ve tried to give more physical resources to our minority communities, but that doesn’t always work. It definitely worked for me, but it did not work until my social equity portfolio was equal and or more significant than my physical resources. Once my social equity leveled out, I naturally evolved.

‪Yes, sometimes, it does start with connecting resources to qualified minorities. However, we need to turn around and provide social proof to our minority communities. Social proof is how you begin to transition into social equity. Now Social proof isn’t all that new, initially publicized by Robert Cialdini in his 1984 book, Influence. Now Social proof is part of almost everything we do, education, sports, media, marketing, and more. I feel that we often forget the psychological and social impact our communities and leaders can make. Minority dominated communities have been oppressed for long that we forgot about their social influences. In other words, most of our community youth are developed through herd behavior. Most of us grow up by watching large numbers of people acting in the same way at the same time, and we naturally build skill sets.

So how can we implement Social proof? There have been several ideas developed over the last 40 years, but few seem to work. Increasing social equity within minority-dominated communities is time-consuming work, but in all honesty, reasonably straightforward. However, we should consider two physiological mechanisms — transmission of thoughts or behavior between peers, and patterns of connections between mentors and mentees.

Now my idea is that If we were to combine private-sector jobs, entrepreneurship, education all in one local center, we could slowly transition into Social proof. A straightforward way to achieve social proof is by building interactive places like business and entrepreneurship centers located in minority neighborhoods, and no, it’s not the same as a community center. These places follow the free enterprise model, which involves small and medium-sized business owners and entrepreneurs. These interactive centers allow the local community the opportunity to engage with business people and entrepreneurs regularly. Instead of forced outreach, which sometimes can have a negative impact, community outreach would be natural and social proof would formulate.

‪When you allow anyone to see proof, then trust is formed, and possibilities start to form in their mind. In white communities, they see opportunities every day because of their social proof. ‬

‪In minority communities, traditionally, our social proof is sports and music, and not to say that’s bad, but unfortunately, only so many people can be athletes or musicians.

Say what you want about Obama and Trump. During both of their administrations, each of them used some of the public policy principles that I described earlier to help reduce income-based disparities in minority-dominated communities.

In 2012, Obama created Promise Zones, referred to as Promised Neighborhoods, and, more recently, Achievement Zones, which are areas experiencing high rates of mobility, poverty, crime risk, and a lack of intensive support for struggling students. He mobilized the public sector and partnered it with local leaders to increase economic activity. In comparison, in 2017, Trump created Opportunity Zones formed by the 2017 Tax Cuts and Jobs Act of 2017. It allows for certain investments in lower-income areas to have tax advantages. In short, these zones are areas that enable companies tax deferral if they relocate and or build their businesses and provide jobs to the local area. The idea is to give the rich an incentive to invest their tax money into the low-income community instead of giving it to the government. If they do that, their capital gains can be deferred, and if held in an opportunity zone for some time, they can get it back, tax-free, and collect the money made on the investment.

As I said earlier, to build a local economy, you need education and jobs. Most poor areas rarely have enough of either. So, building off Obama’s federally backed program and combining Trump’s free enterprise tax benefits, both have set up the blueprints for a robust “third sector” and “fourth sector” of nonprofit resources and private for-profit organizations.

When more businesses are built, more jobs are created, and now we have the infrastructure to do both. As I mentioned earlier, herd behavior plays an integral part in shaping a community. Imagine what could happen if we implement the five fundamental public policy principles in minority-dominated communities. Prospectively, social proof would start reform, because others witness their peers advancing and that eventually transition into social equity, which then spreads and circulates.

As I said earlier, ‪social proof can be done by building interactive places, like business and entrepreneurship centers in minority neighborhoods. My questions for everyone:

1. Should we encourage local governments around the country to pivot their strategies and focus on building social proof through interactive centers?
2. Can we solve income disparity among minorities with social equity?

If we can, in less than two decades, I predict that we’d see social equity blossom tremendously among minorities‬. We’d also see a decrease in government expenses and the increase in the proper use of private and public resources like grants and loans. Finally, we’d also see minority communities become self-sustainable local economies like the dominant white counterpart.