Meditations on a snippet from Amos Wilsons “The Falsification of African Consciousness” an Argument for Venture Capital Infrastructure as a medium for wealth generation in Black America.
Sou Sous,tonties, etc. are an African system of collabrative economics practiced by a community with the intention on creating productive commercial ecosystems whose fruits are shared by the participants of said system. Many, thought of these systems as small and unimportant in the large scheme of a globalized and industrial world, but the truth all large things have small origins, and our current global trade system is a product of trust, partnerships, checks and accountibility.
I always hear the dialouge in my community (Algiers, New Orleans, LA) about regarding the economic prosperity of Vietnamese communities. Comments and remarks about their coveted auspicity, the intelligence, diligence and endurant spirit.
Louisiana has the 10th largest Vietnamese population of the US States, with upwards of 28,000. This is due to the missonary settlement of refugees during the Vietnam War in 1975. Vietnamese are the largest and most dominant Asian population in Louisiana, and this greatly attributed to their communal work life.
64 Parishes Magazine states the following
Unemployment among Vietnamese in the Louisiana labor force was 5.8 percent in 2018, compared to 6.2 percent among non-Vietnamese. In the United States in general, Vietnamese also had an unemployment rate lower than the national average (3.5 percent, compared to 4.9 percent for non-Vietnamese). The poverty rate for Vietnamese households was also less than both the state and national averages. These statistics can be at least partly attributed to cooperation and mutual assistance by group members. From the 1980s onward, Vietnamese who operated fishing and shrimping vessels in the Gulf of Mexico had often been able to do so because of financial assistance from group members. In turn, they often hired group members as crews. As businesses such as beauty salons and nail parlors became increasingly important as places of employment, similar ethnic network support helped Vietnamese entrepreneurs, who then hired Vietnamese employees.
The core principle is the same of a sou sou, namely collaborative economics. Mutual aid among participants enable them to start enterprises and employ and hire members of their communal network, who are then empowered to start their own enterprises and thus hire more members of their network.
This idea of helping one another out is nothing new, but it has not been given proper light in the black community. It hasn’t been explicitly illustrated that this is the same philosophy that has created behemoth corporate entities, extremely wealthy countries, communities and individuals.
The private equity sector in particular is an incredibly fitting example of communal economics. Moreover I argue that emerging technology has made this era ripe for achieving financial freedom through cultural entreprenuership making private equity the key to our economic liberation and prosperity.
A short discourse on the nature of Private Equity Social Networks.
Private Equity itself is a form of investing where high worth institutions and individuals invest in private companies for equity, or debt. Most companies fail, but ones that succeed, scale immensely and lead to exorbitant returns, making PE a very risky,but also very rewarding asset class.
Meta,a product of PE also formally known as Facebook has a story similar to many start-ups. A practical app to solve a simple solution(a friend directory), a scalable environment(college campus), and most importantly a reliable social network to give the project momentum(people with cash, most notably Peter Thiel, the first investor in Facebook.).
The Seed Round, or more heuristcally the “Family and Friends Round”, is a round where start-ups typically launch “GoFundMe’s” “Kickstarters” to finance their projects. Family, friends and people in the immediate layer of their social networks usually come to the rescue to finance the beginnings of something potentially great.
In traditional private equity, the dynamics of social networks, wealth and investing illustrate the nature of economic equity and inclusion in this country (USA). If you want to invest in these potentially disruptive products and services to receive a massive return, you must be in the network. For this case meaning you must either be a part of a capital institution(typically dominated by white males ), an accredited investor (more than likely white), or either have the knowledge and a little creativity to get in the door. All of these scenarios listed out are for a specific group of individuals, usually white, and from a handful of geographic locations around the east and west coasts that are established loci of wealth
Below is a geographic density map showing first round funding across the country.
An unsurprising Pareto-like distribution of wealth.
Typically if you aren’t a Stanford,MIT, or Ivy League grad, or aren’t somewhat connected to either them, big finance, big tech, tech incubators/accelerators, or some sort of university research you’ll have a most difficult time breaking into private equity social networks(unless you a Cassanova of a networker). Thus leaving funding opportunities, high-income jobs, high-risk equities profiting from exponential growth in companies, concentrated for certain individuals thus continuously drastically widening the racial wealth gap.
The Nature of the Racial Wealth Gap
The racial wealth gap widens at the rate of compound interest.
The nature of the Racial Wealth gap cannot possibly be illustrated in this brief section, however, I will lay significant context for the purpose pf understanding our condition in so far as banking and economics is concernd. This is an extremely deep and layered issue, that is actually rooted in the maladjusted psyches of Black Americans, but understanding the foundations of this issue is pertinent to understanding our solution.
The most apparent explanation for this racial wealth gap is America’s original sin of slavery. Forcing a large population to work for centuries for free in high revenue producing industries, specifically like cash crop planting, created an abundance of wealth for white families. Much of this wealth has been ushered into financial vehicles to compund, protect and preserve these ill-gotten gains.
Moreover constant economic disenfranchisement of black communities through segregationist policies governing housing, taxes, predatory eminent domain policies, predatory lending practices, banking disparities, lack of credit access, malicious underwriting, state sanctioned poverty, manipulation, violence and genocides all contribute to the economic despair that is the average black net-worth of America.
A recent study from the Brookings Instritution demonstrated the average black family in America is worth is nearly that 10 times smaller that white families.
This compounded with the fact that Blacks have lost millions of acres of land since the end of Reconstruction, putting them at a dangerous disadvantage.
Land Loss
Largely formerly enslaved people and their descendants — had acquired as much as 14 million acres of land across the United States.
Just a century later, however, that number had dwindled. 90 percent of the land amassed by Black farmers across the country had been lost1. According to the most recent U.S. Department of Agriculture (USDA) Census, completed in 2017, Black farmers account for less than 7% of agricultural producers in South Carolina2. By Upstate county, that percentage varies from as little as 0.5% (Pickens3) to 6.9% (Greenwood4).
The reasons for this steep decline in Black land ownership vary. Of course, the overall decrease in small scale agriculture over the past 150 years is a contributing cause, as is the Great Migration, during which millions of African Americans left the rural South for opportunities in the North, Midwest, and American West.
The Un and Underbanked
According to the U.S. Census Bureau
21% of Black households are unbanked, compared to 5% of Americans.
34% of Black households are underbanked (meaning they do not have the range of bank provided services they need).
42% of Black households are not fully banked.
These conditions can be attributed tom a number of reasons; justified distrust in banks, exclusive cost barriers, racial discrimination in credit access and bias in financial underwriting, the list goes on and on.
Part of this change in supply was structural, as institutions that had been founded to serve low- and middle-income communities either changed strategy or were acquired. Other changes happened at a product and customer level as banks reduced the cross-subsidies from higher-balance customers to lower-balance ones through minimum balance requirements, increased account fees, and overdraft charges.
I argue that these results come from federal housing policies from the early 20th century, these structural inequities can be immediately traced to the Great Repricing phenomenon that started four decades ago. Put shortly , retail banks began realizing through cross-subsidized accounts, higher net worth customers contributed the lions share of revenue, and smaller accounts ended up costing banks more to operate, thus incentivizing and tailoring services to higher net-worth persons, thus excluding lower income persons mainly, thusly people of color.
The inability of blacks to participate in the traditional financial system in an inclusive way has forced them to seek alternative financial services(high interest loans, payday loans, etc.), the vast majority of these means predatory in nature, thus incentivizing and perpetuating destructive institutions within their environments, reinforcing detrimental financial customs within black communities, further disabling them.
There is much that still must be unpacked, nevertheless I beleive the solution to these inequities lies in emerging technology, and venture capital infrastructure.
Black culture through a number of vessles has been the fuel behind American Capitalism. The insatiable desire for black culture, bodies, and soul is effortlessly elucidated by the most prominent trends in music, fashion, hype economies, vernacular customs, etc.
Black culture has been behind a number of growth effects for social network like Twitter, Clubhouse.
Black culture and aesthetics have been adopted by a number of different media personalities, like Madonna, the Kardashians, Miley Cyrus, Eminem, Elvis Presley, on and on and on.
Black music is often the background music for a large share of corporate commercials. Kia, Toyota, Sprite,
At the roots large part of the problem that we as black people must solve is a socio-economic one.
Blacks through out the years have progressively regressed economically. We have an interesting relationship with money
In an honest sense the words sociology and economics are not even fit to describe ethnic customs that gave rise to our extremely rich cultures and societies, or the current conditions we are in as they have been engineered through the tenets of white supremacy through many avenues. As an intelligent black person, I learned early on that it will forever be our past that informs our future, so I have taken the liberty to analyze a portion of history and current practices that will not only economically develop our people, but establish a sense of community.
“A people who do not share history, who do not appreciate the shared experiences that their history represents, are a people who cannot utilize mutual trust, dependability, and so forth, upon which to build an economic social system. ”
As black people we must realize that we pioneered the imagination of an economic system, developed economics before the European came into existence, and getting back to those roots are the best ways to fund our way to revolution as a dominant social force.
Dr. Wilson illustrates West African and Caribbean countries as an economic blueprint for our communities. In Cameroon, tontines, have become the economic engines of choice for the local community. Tontines or as other counters and people call them “sou sou”, are rotating resource pools where each member contributes money to the pot each pay period. The pool of money is then given to one of the members to start or expand a business venture. The pool is then alternated to the next member, and when the previous member has turned a profit, they then pay back the contributing members with the proceeds.
This in a sense this is private equity/venture capital.
Take a minute and think critically, in a white supremacist world, where banks have literally funded our enslavement, brutalization, disenfranchisement do we really thing banks can save us from economic demise, when they refuse to lend, finance and help develop our communities?
What is it inherintly that makes banks disadvantageous to African Americans.
Low Interest rates that don't keep up with inflation.
Lack of intention to build in black neighborhoods.
The facilitation of Redlining practices by being a conduit for insurance companies and assessors.
The predatory lending, and bank as a foreclosure vehicle for wealthier investors.
The disincentivizing in entrepreneurship in the black community.
Furthermore is there really any such thing as a black bank, does such an animal even exist? In a system where money is not distributed by trust from one human being to another but, validated by paperwork and mechanistic formulas that strip potential away from ideas ?
Where there is no stake in seeing innovative ideas blossom and benefit the surrounding community?
The graveyard is the richest place in the world because of so many ideas that have dies with the minds from which they’ve emerged, so let us recollect our natural genius by investing in ourselves and one another.
The beauty of the sou sou system is that investment is truly democratic and binded by social pressure, one of the strongest forces in human consciousness. If you have a group of your closest family and friends investing in you, there is abundant social pressure ensuring you don’t disappoint them, contrary to banks where the only thing binding an agreement is a legal agreement and threat of financial ruin. What good is a black bank if you cannot actually connect with people who look like you that run the institution in the first place?
So what does this look like and how do we execute it ?
Unfortuanatlet as we parse through american history, stories of organized strategy and economic resilience are not told. Stories of us coming together to solve a problem.
There have been many examples in the past of this co-operative system used in our black communities. Stewards such as Marcus Garvey and A Phillip Randolph were pioneers along with locally known social aid and pleasure clubs, and mutual insurance companies. Co-ops in genreral are a foundation Blok to eventually adopting this sou sou system among our community. A solid example of how we can implement a co-op system as black businesses, is cooperatively purchasing supplies for our business to lower their operating cost, thusly increasing profits. Or if 2 black businesses are going on a joint venture, combining marketing dollars to increase the exposure and demand for the new product.
Often times as black people we have been raised with a bias against our old economic systems from the motherland, we don’t even realize they are present in so many ways in our culture, the only thing left to do is embrace them fully and turn them into technologically sophisticated and legally legitimate ventures. We already have the talent and genius, we just need trust and unity.
