Hip hop was our billion-dollar economy that could have saved us, but we have no equity in it. This is a case study on economics and a musical genre that changed the world, but kept its creators poor.
Ye, formerly known as Kanye West, made headlines last week when Adidas and Yeezy came to an agreement to sell the remaining inventory of the Yeezy brand, which is worth $500 million. This has raised questions about who will ultimately benefit from this deal.
This deal stems from a few months ago when Adidas severed ties with Ye. The controversial rapper, fashion designer, and entrepreneur said a series of controversial opinions in a Drinks Champs interview, then made subsequent erratic tweets and rants. Following his outspokenness, multiple companies, including Adidas, withdrew their business relationships. After Adidas dropped him, his $1.5 billion fortune decreased to $400 million, according to multiple news sources including Forbes.
The artist and the shoe company had been collaborating on the popular Yeezy sneaker line since 2013. The Yeezy brand was one of Ye’s most successful ventures. Plus, it helped to establish him as a major player in the fashion industry. With Adidas backing him, he was able to create a sports footwear line that was both stylish and pricey, and highly coveted by sneakerheads and fashionistas alike.
Before his crash, Ye was named the richest Black American in history. In a matter of weeks, his worth was downgraded because some of his remarks offended a particular group who disagreed with his public thoughts and labeled him anti-Semetic. The swift backlash included US Bank and JP Morgan Chase allegedly shuttering his banking affairs with them.
Rather than focus on the ethics or morality of what Mr. West did, his financial “downfall” is one of many examples of how the wealth gap is artificially upheld. If several agencies can impact your wealth score in the way that it happened to Ye, then what he is, is not wealthy, but in a highly controlled economic system where generational wealth is exceptionally unattainable for Black people.
Breaking down the numbers
According to the Federal Reserve’s Survey of Consumer Finances, the median net worth of white households in the United States was $188,200 in 2019, while the median net worth of black households was just $24,100. There are also disparities in access to capital for black-owned businesses. According to a report by the Federal Reserve Bank of Atlanta, Black-owned businesses are less likely to receive loans and other forms of capital, even when they have similar credit profiles as white-owned businesses. In the end, this limits their ability to grow and compete, further perpetuating the wealth gap.
Despite these challenges, Black people have made significant contributions to the economy. As well, Black entrepreneurs have started successful businesses and created jobs, while workers have contributed to various industries, from agriculture to technology. In all, Black consumers contribute to the economy with a buying power estimated at over $1.5 trillion in 2020.
Often overlooked is the multi-billion dollar hip hop industry that has spanned the global terrain enriching all, but those in the society that invented it. Almost two decades ago, ABC news ran an exclusive investigation into hip-hop stating then that it was a 10 billion dollar economy and growing. Where corporate leaders such as Lyor Cohen publicly declare that profits from the industry herded to his family and higher ups are more important than the survival of the people, and in particular Black people, it raises the question of who actually has financially benefited from hip hop?
Ye is a great case study of the vulnerability of “generational Black wealth.” That term, generational wealth, has been distributed on almost every money and currency talk show focusing on the market, real estate and investments for Black people. Yet and still, if the richest man, who used hip hop to catapult himself into being the richest Black person on the planet, cannot keep his wealth to pass it on to his children, then it questions the concept as applied to Black people.
Included in Ye’s case is how slippery the economic viability of hip hop artists is. Over the years, many emcees, deejays, producers, songwriters and others have begun to detail bad contracts and even some admitting to living in poverty while they flaunted an ultra-rich identity. Of course you have exceptional examples, but most of those who carved out the industry from their creative genius have reaped little to nothing in terms of financial compensation. The contradiction shows how many of those who attempted to use hip hop as an avenue to attain a foothold in the American dream, were given a financial nightmare.
It is important to recognize and celebrate the achievements of Black individuals in the economy, but it is also important to address the systemic barriers that continue to hold back black people. Black artists and executives’ lack of control of the current culture of hip hop is more than a loss in the art form’s direction. It is the total confiscation of a very real system of currency that went directly to Black communities.
Today, hip hop is currently embedded in American language, music, dress and mannerisms. Hip Hop is Godzilla and the last fifty years have the marks to prove it. Ironically, the culture that created it has no gold coins to show for it. In the markets, equity gives you leverage and control to direct as you see fit. Looking at the negative wealth reports of Blacks, and the generations who created hip hop, we lack any type of leverage. You can see that with many artists selling their musical catalogs; some after they just fully acquired them.
Black people in the land of America are still screaming generational wealth. With what we see now, was the dream ever really attainable? In this new industrial revolution, credit, real estate, and entrepreneurship are the preferred vehicles to provide the gateway to all we desire. If anything, I hope that the rhythm of hip hop creates a cymatic token that will give the culture access to unlimited currency. So we can truly pass down some gold coins. Ashe
The D.K. Reed report is an ongoing series of commentary and reporting by currency + news + culture reporter, Duane K. Reed.
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