11 Dec December 11, 2019 – Angel Thomas W. Jones and Crack David Farber
Thomas W. Jones is founder and senior partner of venture capital investment firm TWJ Capital LLC. He previously served as Chief Executive Officer of Global Investment Management at Citigroup; Vice Chairman, President and Chief Operating Officer at TIAA-CREF; and Senior Vice President and Treasurer at John Hancock Insurance Company. Jones received masters degrees from Cornell University and Boston University, and holds honorary doctoral degrees from Howard University, Pepperdine University, and College of New Rochelle. From Willard Straight to Wall Street: A Memoir provides a front row seat to the author’s triumphs and struggles as he was twice investigated by the SEC—and emerged unscathed. His searing perspective as an African American navigating a world dominated by whites reveals a father, a husband, a trusted colleague, a Cornellian, and a business leader who confronts life with an unwavering resolve that defies cliché and offers a unique perspective on the issues of race in America today. In stark and compelling prose, Thomas W. Jones tells his story as a campus revolutionary who led an armed revolt at Cornell University in 1969 and then altered his course over the next fifty years to become a powerful leader in the financial industry including high-level positions at John Hancock, TIAA-CREF and Citigroup as Wall Street plunged into its darkest hour. Jones witnessed the destruction of the World Trade Centers on 911 from his office at ground zero and then observed first-hand the wave of scandals that swept the banking industry over the next decade.
David Farber – Roy A. Roberts Distinguished Professor of History at the University of Kansas and Author of Crack: Rock Cocaine, Street Capitalism, and the Decade of Greed
David Farber is Roy A. Roberts Distinguished Professor of History at the University of Kansas. He is the author of numerous books, including Everybody Ought to be Rich (2013), The Rise and Fall of Modern American Conservatism (2010), Taken Hostage (2004), Sloan Rules (2002), The Age of Great Dreams (1994), and Chicago ’68 (1988). He lived in New York City with his family at the height of the crack cocaine years and later lived across the street from a small-time crack distributorship in Philadelphia. Crack, his latest book, tells the story of the young men who bet their lives on the rewards of selling ‘rock’ cocaine, the people who gave themselves over to the crack pipe, and the merciless authorities who incarcerated legions of African Americans caught in the crack cocaine underworld.
Highlights from Thomas’ Interview
One of the reasons I wrote my memoir is because that strange story actually reflects the same strange story of how America has changed in those same 50 years. My life is a microcosm of what’s happened in this country with regards to race relations in the last 50 years. And I think that my life is a message of hope. Hope and optimism with regard to the progress that we’ve made, even as we acknowledge how far we have yet to go. I was prepared to fight in 1969, because I thought my generation was the generation that was tasked by history with the obligation to end the oppression that had afflicted African Americans for 375 years. I was ready to put my life on the line to do that. That’s just course of history. It didn’t happen. I didn’t have to make that sacrifice, because America has changed to a degree that could not have even been imagined 50 years ago, and I’m thankful for that. I’m grateful for that. I wrote my memoir, in part, because I think our country ought to acknowledge that we’ve come pretty far. Though we have a ways to go, we want to give ourselves credit for what’s been accomplished.
I might agree that our generation should have gotten more done. But on the other hand, I try to put things in historical perspective. For example, when we take the egregious kind of incidents that Black Lives Matters focuses on with regard to police violence against black men in particular. The truth is that even though those incidents occur with disturbing frequency today, the frequency of those similar incidents was 50 times greater 50 years ago, and probably 100 times more frequent 100 years ago. While we can criticize ourselves that we don’t have a perfect society where no such incidents occur at all, the truth is, we have come a long way, a long journey with regard to reducing the frequency of that kind of damage in economic terms, even as we can criticize the fact that poverty levels within the black community are higher than within the white community in America. The truth is that millions and millions and millions of African Americans have successfully entered into the middle class and upper middle class and even higher reaches economically in America in numbers and economic strata that would have been considered impossible 50 years ago, let alone comparing it to the economic conditions of black America 100 years ago. I’m the kind of person that cries to have perspective, and I will call the glass half full, instead of half empty.
I think that the facts are incontrovertible that capitalism has lifted more people out of poverty all around the globe than any other economic system. And it’s one of the reasons why an essentially socialist country like China actually operates what you could call a state capitalism system. That’s because they, the Chinese, are astute enough to recognize that they have to have an economic system that allows powerful incentives for individual initiatives and individual drive to get things done and mechanisms that are focused on efficient allocation of capital.
Those are the key drivers within the capitalist system, but what I would criticize about our capitalist system is that again, going back 60 years, we practiced what I would call a more benevolent or paternalistic form of capitalism. Most major corporations tried to give sustainable employment over the long term to their employees. Most major corporations tried to give very handsome incomes and medical benefits and retirement benefits to their employees. Most corporations not only had a focus on employee welfare in addition to shareholder welfare, but they also focused on community welfare, so most major corporations were key bit benefactors in their home communities with regard to their charitable contributions to the civic fabric, the civic welfare of their communities, and we’ve kind of stepped away from that.
The focus that we have on economic efficiency, it can discourage quite a few people. Because when you run a system which appears as though only the very top achievers are going to succeed, you know, only the top 1% or top 10% are going to really fare well, it discourages more than it encourages because there are an awful lot of people out there who are going to be thinking, “I’m not going to end up in the top 1%, and I’m not going to end up in the top 10%, so maybe I would be better off with some other kind of system.” I think that’s where we get this kind of nuance within the millennial generation, where people say, “Well, maybe we ought to think about a more socialist kind of economic framework, because I’m not so sure that I’m going to do so well in this capitalist system.” So we who believe in capitalism have to be a little bit more mindful with regards to how we try to see that the economic benefits of capitalism are shared around around the entire community.
Shortly after college, my first job, I worked for somebody who then happened to be recruited to become a senior executive at one of the major public accounting firms, and he recruited me to come and work for him on the consulting side of what was then Arthur Young and Company in the Boston office, and that was my first exposure to what I would call elite American business. I just felt like that was where I wanted to be. They were so impressive with how proud they were of the work they did, how hard they worked, their technical competence, I just felt the beauty of the office, the quietness of the office, the elegant furnishings upon a high floor overlooking Boston Harbor. I just said, “This is where I want to be.” These are people I want to try to belong to in this world.
I always had a knack for being able to generate this revenue. I was very fortunate. I did good work on the project I was assigned, and I managed to generate additional revenue from our clients. And that’s a palette that’s very highly valued in the personal services professional world. I had mentors who started paying attention to me, which meant that I received promotions and so on. Then at a point I decided, even though I was doing very well, that I did not have the full set of technical skills and training and credentials that I would need to sustain that over the long term, so I went to night school at Boston University to get my MBA. In that process, because I was still working full time, I was exposed to a three year period where I was literally working around the clock, because I was working full time going to school at night studying and so on. On the weekends, and this was the discovery, I made a discovery that changed my life. During this first period of really working hard to full capacity, I discovered that all the times before when I thought I was working hard, I really wasn’t. I had only been working at 90 to 95%.
That’s what most of us think, isn’t it? You get an A, wow, that’s all you can expect to do. But here I was, I was pushed to the hundred percent level, and I found out what that feels like, and that I could do it and I could sustain it. That meant, once I learned how to do it, the rest of my career, it doesn’t sound like much difference between 95 and 100 on a test, on a work assignment or a project. It doesn’t sound like much on any given day, and it isn’t at any given time, on a test or project. But if you sustain that differential between you giving 100, and the guy next to you who’s an A player giving 95, if you can sustain that level of excellence day after day and week after week and month after month and year after year, you can take yourself to an elite level and that’s what I learned how to do.
I was 33 years old when I was recruited to become a vice president at John Hancock Insurance Company in Boston, only the third outsider that they had hired in 125 years to come in, at the vice presidential level, as an officer, and the first black executive hired to be an officer at Hancock. That was my first breakthrough. And then, every seven years or so after that, there was another significant breakthrough.
It’s significant that you say 25 Jim, because that’s exactly the age when I started my push of, I am really going to try to excel in my life. Develop more skills, develop more discipline, and really push myself to see what I’m capable of. It happened when I was 25. And it was a decision. Yes, it doesn’t happen by accident. It’s a conscious decision. It’s a conscious decision of how you’re going to live your life and how you conduct yourself.
I’m worried about the tone and atmosphere in our country, the divisions around economic status and race and ethnicity. As I said at the outset, I think we’ve made levels of progress that would have been almost unimaginable 50 years ago, and certainly 100 years ago, and instead of congratulating ourselves and that success bringing us closer together, we have voices shouting in ways that separate us and divide us, and that worries me. But I also recognize that same disease has spread around the world. It’s a violent disease. And it’s not just in our society, but it has spread globally. And that worries me.
The way I would draw the distinction is focusing on the source of the wealth. For example, in America, one of the reasons our country is the dominant economy of the world, the largest economy in the world, is because we’re constantly reinventing ourselves. To that end, we’ve reinvented the brilliance of entrepreneurs generation after generation after generation of entrepreneurs. The people like Steve Jobs create the Apples of the world, and the people like Bill Gates create the Microsofts of the world. Similar, comparable people are in each industry, biotech and so on. Those people, those brilliant entrepreneurs, they create new industries that create jobs and opportunities for wealth for literally hundreds of thousands of people. If they end up with $100 billion dollars, well, the society has benefited even more, so I don’t have a problem with that. We have another class of billionaires who are people that are essentially clever financiers. Unfortunately, one of the things that happened in the 1980s is that we had a whole new wave of firms that went into a leveraged buyout business.
An early model in leveraged buyout was essentially taking over companies that had very rich benefits, very high compensation levels and so on, and stripping costs down. When you strip the cost out, cutting headcount, cutting benefits, and so on. That increased cash flow would enable those companies to put on debt which makes dividends out to the leveraged buyout firms that have taken them over. They also supported higher valuations when those companies were ultimately floated onto the public stock market.
Unfortunately, one of the things that happened is that so much money was made doing that, that many Wall Street executives looked over their shoulder, CEOs looked over their shoulder and said, “Why are people like that getting 100 million dollars? Why are people like that getting so wealthy? If that’s what our society is going to pay for, which is essentially stripping out cost from corporations, I can do that.” And that’s when there was a real turn from the more benevolent capitalism that our largest corporations had been in the habit of practicing and that’s brought us now to this point where many people in America have lost confidence, because the benefits of our economic system tend to go to such a small number of people. My point is that people that are just the financiers and the manipulators, I don’t know if it’s through a tax mechanism or whatever, but they do not deserve it. They’re not creating wealth. They’re not creating wealth. They’re clever and very smart, and what they’re doing is perfectly legal, but that’s not the creative genius that drives our economy. They create efficiency, and there’s value in that, but not as much value as entrepreneurs deserve.
The turning point was. It was that, it was Michael Milken with the junk bonds financing the corporate raiders. As mainstream corporate America came under pressure, where they saw that raiders could get financing to attack their companies. That was one of the reasons the mainstream CEO started looking over their shoulders and saying, “Well, if that’s what you’re going to get rewarded for, taking costs out, I can do that to grow the culture.” They took the cost out and they wanted their compensation to be primarily driven by stock.
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