Sunday, December 18, 2011

Materialistic Consumption or Wealth Building?

A focus on material trappings is becoming an ideology in its own rights. Having a large quantity of these trappings is becoming an end rather than a means. It is becoming a measure of self-worth and success.  
- Jonathan Mobutu
Materialism is defined as a preoccupation with material rather than intellectual or spiritual things. Call me crazy, but is this not American society in a nutshell? We are a capitalist nation and it is all about what you got or if you do not have it then it is all about how you can get it (Wormer, Besthom & Keefe, 2007). I refer to this as individualistic materialism. We want the biggest houses, the baddest cars, the nicest clothes, the hottest shoes, and the best jewelry...for ourselves...to make us happy.

African-Americans play their fair share in society’s materialistic value system. Most blacks are living below the poverty line or close to it, but they are still very materialistic. It is a materialism marked by the consumption of things. In his book, The High Price of Materialism (2002), Tim Kasser says that poverty creates a troublesome environment in which people often worry about how their basic security needs will be met and they often become obsessed with materialistic goals in order to compensate. University administrator, Ferdinand Hamilton, leans towards this view when he says, “I understand the need to compensate for a lot of inequities” (Benjamin, 2005, p. 14). It is not unusual to walk through a lower-class, black neighborhood and see shiny Cadillacs sitting on equally shiny 32-inch rims in front of shabby looking homes. It is also not unusual to see young women in these same neighborhoods walking around with Louis Vuitton purses (not fake ones either) while barely making it paycheck-to-paycheck.

The danger in such materialism is that these objects quickly become a measure of one’s self-worth (Benjamin, 2005). These perceptions and/or behaviors are learned. George Leory states, “materialism emerges in children as early as pre-school age with perceptions of possessions as valuable” (2008, p. 7). In a conversation with a co-worker as well as several other people, it was revealed to me that the young children in their families (all under 10 years of age) were all asking for iPads, iPhones, iPods, Kindles, or Xbox’s for Christmas this year. What is, say, a 7-year old going to do with an iPhone, much less an iPad? (I couldn’t operate an Apple product to save my life! And whatever happened to Barbies and action hero figures?) If children have not been instilled with materialistic values by their parents, then the next culprit is the media. There has been a noticeable increase in the marketing towards youth in the past several years (Leory, 2008; Green, 2001). The best example of youth marketing is Disney. All of the Disney paraphernalia, Disney Radio, Disney Channel, and other various branches of this empire are all targeting children.

Consequently, materialism in black youth, specifically in young men who are at the bottom of the class hierarchy, may drive them to get involved in criminal activity, such as selling drugs, to make "easy" money. In his acclaimed album, The College Dropout, Kanye West makes a reference to the admiration of drug dealers who seemed to always had money in the track entitled We Don’t Care rapping, “As a shorty I looked up to the dopeman; only a dopeman I knew that wasn’t broke man.” Similarly, a little over ten years ago, an article appeared in The Crisis which took a look at the violence over turf wars in Washington, D.C. The article described how some of the young men selling drugs could earn up to $5,000 a day, which helped them out financially as they assumed the role of heads of households (Lindsey, 1990). In addition to making hefty earnings, the young men were also obsessed with materialistic objects: expensive jogging suits (don’t judge them, this was in the ‘90s), sneakers, and probably jewelry, too, to advertise their monetary success (Lindsey, 1990).

A strong focus on materialistic gains can have a detrimental effect on one’s health. Drawing from a number of research studies, Kasser (2002) discovered that people, whose main focus was materialistic goals, experienced more depression, headaches, backaches, sore throats, and sore muscles and less self-actualization. To reiterate my earlier points, people are likely to become materialistic as a result of too much television and/or if their parents are highly materialistic (Kasser, 2002). Interestingly enough, death and falling in an endless black void played a big part in the dreams of materialistic individuals (Kasser, 2002). I wonder if rappers whose content is filled with materialistic lyrics experience these symptoms.

Nonetheless, I do not view materialism as a completely bad thing. It does push us to work harder to make our lives better after all. The problem is the focus on individualistic and materialistic consumption rather than the building up of wealth. Like journalist, Leo Aramis, said “We are not materialistic enough...We need to get more materialistic and less boggler minded” (Benjamin, 2005, p. 15). More materialistic? Yes. Instead of making just enough money to buy trinkets (like some useless rims) more blacks should be aiming to own stocks, bonds, and opening mutual funds accounts. In chasing material possessions, blacks are in a sense “working for the money” as opposed to “making the money work for them” by investing, which would lift them out of poverty.

There is a lack of real assets among the African-American community. According to Benjamin (2005), over ¾ of black wealth is in real estate, cars, and checking accounts, while it is ¼ for whites. Another misfortune is that “56% of black households own no interest-bearing assets” (Benjamin, 2005, p. 17). The United States has a black population of 42 million, but only a meager 11.6% of the black wealth is in stocks, mutual fund shares, and other interest-earning assets (Benjamin, 2005; African-American Population, 2011). In an article for The New York Times, economics professor at Boston University, Glenn Loury, stated that “half of black families had a net worth below $8,400 while that figure was $63,000 for whites” and “only 4% of blacks—compared with 25% of non-blacks—were worth $170,000 or more” (1998, para. 5). Today, the net worth of black families has not grown by much. In 2007, the figure was $9,300...but took a staggering dive to $2,200 by 2009 as a result of the recession (Nutting, 2011).

Thus, not only are blacks systematically kept out of the financial equation, but once they break through the barriers, they are not well versed in the financial market. Even well-educated blacks lack knowledge in the financial market (Loury, 1998). Does anyone know the different classes of mutual funds and how to calculate their returns? Does anyone know the difference between stocks and bonds? What is an options contract? Should you invest in gold or silver? Confusing?

Too many blacks are descendants of people who used to save their money in jars and boxes hidden under floor planks. There is a natural distrust in banking institutions because they are affiliated with the “white” world (and looking at today’s financial crisis and the culprits, our ancestors weren’t really wrong for being distrustful). But the continued distrust is holding many blacks at a disadvantage. There is no wealth that can last for generations to come; only momentary riches.

Someone pass this along to Jay-Z and Kanye West: How about they write a song that teaches us about stocks and mutual funds. Instead of rapping about how much money they got, they should teach their fans the smart way to get it and make it grow. I know Jay-Z knows about stocks! I just know it.


References

Benjamin, L. (2005). The color line as reality: Race, lessons, patterns, and propositions. In The black elite: Still facing the color line in the twenty-first century (pp. 1-40). Lanham, MD: Rowman & Littlefield.

Green, C. (2001). Manufacturing empowerment and resisting globalization. In Manufacturing powerlessness in the black diaspora: Inner-city youth and the new global frontier (pp. 149-166). Walnut Creek: Altamira Press.

Kasser, T. (2002). The high price of materialism. Cambridge, MA: The MIT Press.

Leory, G. (2008). Materialism and college students: An exploration of multiple socio-ecological domains (Master’s Thesis). (UMI No. 3291051).

Lindsey, T. J. (1990, February). Materialistic depression and our black youth: An indictment of mental health. The Crisis, 98(2).

Loury, G. C. (1998, June 7). Opting out of the boom: Why more blacks don’t invest. The New York Times. Retrieved from http://www.nytimes.com/1998/06/07/magazine/opting-out-of-the-boom-why-more-blacks-don-t-invest.html?scp=1&sq=why+more+blacks+don%27t+invest&st=nyt

Nutting, R. (2011, February 9). Wealth of black families have disappeared. MarketWatch. Retrieved from http://www.marketwatch.com/story/wealth-of-black-families-has-disappeared-2011-02-09

Wormer, K. S., Besthom, F. H., & Keefe, T. (2007). Culture and Society. In Human behavior and the social environment, macro level: Groups, communities and organizations. New York, NY: Oxford University Press.

2 comments:

NfiniTINAked said...

Well-written article. Unfortunately, too many of our people don't share the knowledge with people once they do make it. It seems like the goal is to get what no one or few people have and just flaunt it, instead of bringing your fellow man up with you. There are quite a few of our people in the DC area who are doing well, but they act like they are above other people. Truly a shame.

Virgie Aldridge said...

I'm with you on custody the turnover of a portfolio low. I have not sold any positions this year either. I did sell a few last years, but it was to take gains and aided me pay of my scholar loans.Strategies wealth building

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