The oil that drives the two Americas

The recent press coverage of the record profits of America’s largest oil companies seemingly slipped right by most of America as if carefully lubricated by their own petroleum products. And somewhat ironically perhaps, the headlines which documented the record earnings of America’s oil companies were often positioned right above those discussing the abysmal and ongoing failures of our nation’s public and urban schools.

As we now cruise rapidly toward the middle of 2006, a year in which, in many ways, our great nation seems poised on the edge of its own kind of oil-slicked, slippery slope, there is ample reason to pause, in the midst of myriad oil and automotive metaphors, to ask ourselves if we are appropriately contemplating the realm of issues with regard to the future of America’s proverbial economic engine.

Today, America arguably faces the biggest crisis we have ever faced with respect to our position as a global economic superpower. Curiously though, this threat comes not from terrorists, or other external sources. Instead, this threat to our future hails right here, from within our own boarders.

At precisely the wrong moment in history, America, as a nation, has in many ways turned its back on its disenfranchised populations. Drop-out rates now exceed 50% in many urban high schools. The gap between rich and poor is rising, largely unabated. America’s prisons now contain more young African American men then will attend colleges in 2006. Low income students are a falling percentage of those gaining access to America’s colleges, as according to the College Board, low income students with “A” grade point averages are now about as likely to attend college as high-income students with “D” averages (Access Denied, 1992-3 BPS, The College Board).

Despite the accumulation of vast repositories of wealth for some Americans over the past two decades, our inner city populations are suffering diminishing net worth and dangerously high levels of unemployment (relative to the national average). In Los Angeles for example, this rate of unemployment is over 13% - twice the average for Caucasians.

Our urban youth are increasingly left with a poor set of choices, including sub-standard secondary school options and few economic alternatives. They are systematically disenfranchised from the technological know-how that is so integral to meaningful employment in this century. We have tens of thousands of would-be leaders in our urban centers that are unable to access or afford higher education, and we have millions of children who are not provided with adequate health care services and health insurance.

Beyond being a mere signal of our nation’s diminishing altruism, or a symbol of a disturbing trend toward social apathy, these facts actually signal something even more alarming. In fact, if unchecked, they will spell economic doom for America in this century. This is not wild speculation, either. The atrophying of our human capital is in fact occurring at the worst possible time – precisely the same time that other nations around the globe, such as China and India, are surging forward to “beat us at our own game” in the fierce and unforgiving global economy of the New Millennium.

The stark reality is that today America is faced with an urban crisis that is actually far more daunting than the poignant disparities addressed in the civil rights era, when Dr. King and many others gave both their energy and lives for social justice. As vital as that struggle was during that historic period of the 1950’s and 1960’s, the battle then was largely one about America’s social conscience and moral compass. This time however, the battle is not simply about social justice. This time, our nation’s collective economic future is at stake.

Today, the destiny of our great nation is actually integrally linked to our urban population centers as never before. Our urban populations – who collectively hold the laborers, managers, entrepreneurs and employees required to fuel our economic engine in this century, are the home to thousands of people who need to be better educated, better trained, and made more ready to contribute so that our economy will be able to thrive in this century. Yet this is simply not happening. Moreover, there is no clear plan or vision to reverse the inevitably disastrous national trends.

I recently had the pleasure of participating in a panel on poverty at the University of Southern California with Former Housing and Urban Development (HUD) Secretary, Jack Kemp, and the CEO of Timberland, Jeff Schwartz. As I listened to them speak from their respective positions in government and business, I realized that these two men share an underlying compassion for the less fortunate.

Beyond this though, they each also seem to fully understand that not only can America do better, today, America must do better. It seemed that all three of us were keenly aware of the fact that our nation is now on the ultimate burning platform. Moreover, these two accomplished men also seemed quite unique with regard to their intrinsic understanding that as a nation, we now seem to be operating from a series of faulty premises.

The first faulty premise is that the inertia of our nation’s greatness will somehow carry us through this century, without the development of a 21st Century plan, or strategy. This simply is not the case. We have no clear plan for how we will maintain our greatness today. And as the bible says, without vision, the people will perish.

The second faulty premise is that we, as a nation, somehow lack the capital to solve our issues. In reality, scarcity of capital is not yet our main issue in America today. As such, it does not often truly drive our choices. In point of fact, our nation has the resources to solve our internal problems with regard to human capital and social justice, but what we have lacked is the resolve to do so. In the end, America’s issue is not about resources, it is about collective willpower – the will of this nation to develop a meaningful strategy before it’s too late.

To find one of the most glaring examples of the vastness of America’s resources, one need look no further than our present Middle East conflict. Regardless of one’s political position with respect to the war in Iraq, the fact is that for the past three years, our nation has been spending an estimated 100-200 Million dollars per day, fighting a war half way around the world - a war that was unplanned, unbudgeted, and one that has exacted a significant cost on our nation (in terms of both lives, reputation and resources).

If nothing else, this conflict is certainly evidence that we could have long since found the resources to proactively engage those who are battling their own “wars” daily on the streets of America. Importantly, the juxtaposition of our possible expenditures - massive capital expenditures on war, versus massive capital outlays for our own people, in the final analysis reveals no zero sum game at all.

There is no intrinsic trade-off for us between fighting terrorism and human capital investment. These respective “choices” are false on their face. Indeed, there is no intrinsic limitation of resources for America. Our limitless capacity for borrowing as a nation has always expanded our financial capacity as far as required to pursue what we deem imperative. As such, a true limit to our country’s financial capacity has not yet actually been found. As such, the path we are today is solely and exclusively a question of our national priorities.

We have now chosen to aggressively fight foreign terrorism and wars on foreign soils, for what may in the end even prove to be historically defensible reasons. But regardless of the laudability of our war on terrorism overseas, we have deliberately neglected the need to develop an intensive strategy regarding the terrorizing imagery of our own future in this country. We have neglected our largest threat to America, which hails not in the minds of terrorists off our nation’s shores, but right here, in the inner cities that are falling hopelessly behind.

If we had invested sufficient resources and ingenuity into our urban infrastructure, job training, daycare support, academic preparation programs, gang prevention, homeless prevention, rehabilitation, college tuition support, college access programs and other initiatives over the past decade, we likely would have resolved most of America's most pressing urban issues and transformed ourselves into a different, far more economically viable nation.

But while our federal government struggles at the highest levels with the important question of how to prioritize our nation's security in the world with our national security right here at home, one might the more agile private sector, whose interests are so clearly linked to the development of adequate human capital, to boldly step-in, to help resolve the crisis over America’s future.

If ever there was a time for corporations in America to get involved, it is now. And if ever there were companies to move aggressively in the social sector, it is the oil companies.

Over the past several months, oil companies have emerged as the most profitable companies in the history of the world. And these gargantuan gains came without a forecast. There were no plans to receive anything approaching such unprecedented income. As such, no one could have possibly calculated them into their personal or corporate income projections. This massive amount of capital simply represents the ultimate "windfall". Is it unreasonable therefore to expect them to aggressively pick-up the mantra of investment in our future?

Now, before I go further and am immediately labeled a “socialist”, let me say that I have no qualm with corporate profits, and I am actually largely a believer in the merits capitalism. Furthermore, I fully recognize and appreciate the risks that investors take with shareholder capital and their right to a profit, if realized. Finally, I also even recognize that these two companies’ respective commitments to the betterment of our citizens have, in some instances, been quite laudable (For example, I am personally aware of major seven figure commitments to the urban community from BP in Los Angeles).

However, in this particular case, there are two mitigating factors which steer a rationale mind away from advocating a pure “business as usual” capitalism now.

First, even beyond the sheer magnitude of these monopoly profits is the fact that these gargantuan gains came at a time when much of America, including those who paid in to these companies to establish these gains could ill-afford the price tag. In other words, a very large portion of these windfall corporate gains actually came at the expense of America's poorest citizens, who paid-in a disproportionate share (and an onerous percentage) of their disposable incomes at the gas pumps in 2005.

These were people who were, in the end, left financially hamstrung and fighting daily just to get to and from work. And all of this so that others, on the back end, could reap the largest profits in the history of the world? If ever there was a time to consider a strategy of wealth redistribution, I submit that this would be the time.

The second point however, is even more important. Because due to the aforementioned position of America in the global economy of the New Millennium, “business as usual” and the power of the unrestrained market, is no longer always sufficient. Given the economic threats we now face, when fortunes change in a draconian way, our approaches must change also. This season calls for new and innovative approaches.

Because of these two points, any reinvestment in the less fortunate and in the very fabric of America itself by these oil companies at this time, would not only seem “fair and just”, but it would also seem to even be precisely the right thing for them to do for their own economic future at this point in history. As such, I am left wondering if now isn't the time for them to consider a rather bold, new strategy. And while these companies are under no obligation to answer this call, I believe that every bold new initiative begins with a dream and a vision. So, allow me to advance mine.

My “dream” is that these two oil companies work together to establish a $1 Billion fund for each of America's top 3 population centers (i.e. $3 Billion in total funds). This amount represents only about 5% of their total profit windfall and therefore will have no significant or appreciable impact on shareholder wealth. This investment should be targeted toward areas which, if transformed, would yield an unsurpassed impact on the nation's future wealth and economic stability

The administration of these funds should be carefully constructed with community organizations, educations of higher learning, civic leadership and others, so as to facilitate their efficient disbursement to only the most proven and cost effective solutions. It should be considered as investments (not giveaways) in order to achieve results over a ten year period. The goal should be to finally and firmly put our collective energy, financial and intellectual capital around the creation of a metrics-driven plan for community (urban center) transformation given the unprecedented infusion of capital resources.

Perhaps change really does begin with a dream. But this dream is actually founded in the reality that such a plan, which could help to squarely reposition and maintain America as a global superpower in this century, now has the unexpected resources to help bring it to fruition. Imagine the excitement and energy that this could bring to America. Imagine the reignited sense of unity.

However, instead of embarking on such a bold initiative for America’s future, the oil companies have recently announced their pending intentions to largely return this windfall to the hands of their shareholders. And again, while I hold no particular issue with shareholders gaining wealth under a normal set of circumstances, we all have to question the practical cost of this particular level of unexpected wealth.

At first pass, it doubtless would seem that shareholders of these companies may not see my plan as being in their own self interest. After all, they are not the same people who suffered for the creation of these profits. Nor are they largely the same people who are falling hopelessly behind in our economy.

These shareholders are not principally the people who live in the neighborhoods plagued by vicious, domestic terrorism, places where a shrinking access to quality secondary and post secondary education, an evaporation of subsistence wages have forced families to work to find two and three sources of income only to still fall a step behind every single week. Given all of this, it might be very easy for these shareholders to turn a deaf ear to the sounds of this dream of mine.

However, these shareholders do have one thing in common with all of those people in this nation who are now suffering in their own communities: Because in the end, we are all Americans. As such, our destinies are inextricably linked, for good or for bad. These shareholders, and indeed the very oil companies themselves, are, in the end, just people, like all of us. They too are people, people who will eventually, over the course of the next two decades, reap what we now sow.

We must realize in the end, an “invest in America” strategy in the face of unexpected windfall profits represents the ultimate "win-win-win": It is a win for the poor communities; It is a win for the oil companies and their investors (who still have 95% of their unforeseen mega-gains to redistribute to shareholders and now are investing in their own future labor pool); And finally, it is a win for America itself.

In the book of Luke, the bible tells us that "To whom much is given, much is expected". I can think of no better admonishment to these two corporations, their shareholders, and even to this great nation at this time. I also cannot possibly imagine a more powerful way for us to recognize and honor the memories and recent passing of Coretta Scott King and Rosa Parks - two icons whose legacies live on, but whose dreams are far from fulfilled.

Many stand at the ready to commit every energy, resource and capability we have to assist in executing such an audacious, new strategy. I only hope that these two oil-rich companies are listening and will perhaps now, unequivocally, answer the call to help us drive our two Americas back toward one-ness.