1978 postage stamps
in community and economic development
Federal Reserve Bank of Atlanta
Volume 8, Number 3
In This Issue
Bringing Income Inequality in from the Cold
No longer content with income differences, today's professionals address asset building techniques.
Little Haiti Housing Association
Little Haiti Housing Association is one organization that incorporates asset building in its strategy.
Asset Building for Healthy Communities: A concept paper
ACEnet, a rural economic development organization, presents a new perspective on asset building.
No Time Like the Present
Perhaps you have noticed: the 1970's are back. We see it with new television shows, fashions, advertising, and manufacturing. And yet, everything is completely different now, with new social, political, and economic issues confronting us that were almost unimaginable twenty years ago. In this issue, Partners takes a retro-look at where we were twenty years ago, and where we may be heading now.
Of course, not everything has changed. For example, the New York Yankees won the World Series in 1978, beating the Los Angeles Dodgers four games to two. They did it again this year, beating San Diego in four straight games. And America's fascination with automobiles is as strong as ever as evidenced by the Volkswagen Beetle's triumphant return.
And according to the 1978 World Book Encyclopedia Year Book, back then "the sound of money belonged to the sound of recordings." Forget about boxing great Muhammad Ali, who made $3.5 million in his February bout with Leon Spinks (he lost), and another $3.25 million in September (he won).
The big bucks were paid to musicians like Stevie Wonder, who was guaranteed $13 million in artist royalties from Tamla-Motown Records. And he was but one of a few multi-millionaire recording artists. Peter Frampton (Frampton Comes Alive), Fleetwood Mac (Rumors), and especially the Bee Gees (Saturday Night Fever) dominated the music scene with multi-platinum albums. Today, dozens of bands like 311, the Backstreet Boys, and Third Eye Blind have multi-platinum recordings.
Indeed, a strong economy for much of the 1990's provided considerable freedom for the country. From automobiles to baseball to movies and music, the country has enjoyed considerable benefits relative to 1978. Rapid advances in technology alone, for example, allow virtually unlimited access to the Internet, a proliferation of cellular telephones, access to digital satellite television receivers, and more.
And business owners and consumers face much better economic news now versus twenty years ago. Inflation is lower (currently 1.5 percent for the year versus 8percent in 1978), unemployment is lower (less than 4 percent including the armed services versus 5.8 percent excluding the armed services), and interest rates are significantly lower.
In fact, by year-end 1978, the Discount Rate reached 9 percent, the prime rate was 11 percent, and the federal funds rate reached 10 percent. Home mortgage rates began a steady climb during the year and were over 10 percent as 1979 arrived.
In contrast, the current Discount Rate is 4.75 percent, the prime rate is 8 percent, and the federal funds rate is 5.35 percent. Home mortgage rates are now close to 6.5 percent or less.
These differences reflect an amazing transformation. Unlike 1978, when the Federal Home Loan Bank Board issued regulations prohibiting savings and loan associations from redlining, 1998 causes us to look every bit as hard at the financial impediments to lending as we do for discriminatory lending practices. We recognize that not only must we face issues impeding access to credit for consumers, entrepreneurs, and homebuyers caused by differences in income, but also by differences in net worth.
And most importantly, we know that asset generation is critical to wealth generation and poverty alleviation.
Looking to the future, Partners presents varied perspectives of asset generation. First, in Marie Easley's article we recap Federal Reserve Board Chairman Alan Greenspan's thoughts on bringing the issue of income inequality in from the cold, calling for more research and focus on this important issue. We couldn't agree more. This same article contains perspectives of the Ford Foundation and Washington University's Michael Sherraden on asset building.
A second article focuses on a nonprofit dedicated to community asset building. Juan Sanchez discusses the efforts of Little Haiti Housing Corporation, a Miami CDC and its implementation of specific strategies to create net worth for a minority population living in north Miami, Florida.
Finally, we are pleased to present excerpts from a concept paper by ACEnet, an economic development organization. The paper offers some new ideas on asset-based neighborhood development strategies.
We've come a long way since 1978, and although new problems confront us, our progress has been substantial. And looking at the photographs in this issue, I suspect we wouldn't really want to turn back. - Editor