Will We See A Pre-K TARP? (Toxic Assets Relief Program) In 20 Years?

Over twenty plus years, Harlem Children’s Zone (HCZ) grew from a one-block pilot offering integrated social service delivery to a vast enterprise overseeing 20,000 children and adults within a ninety-seven block area. Under the leadership of Geoffrey Canada, hundreds of millions of dollars flowed from finance interests into HCZ’s programs, including Promise Academy Charter Schools, which were prominently featured in the social impact documentary “Waiting for Superman.” Extended day charters, full day pre-k, parent academies, and health initiatives are all key to the effort and collect LOTS of data.

Canada had no problem funding these services with the support of deep-pocketed donors and a political climate created by Michael Bloomberg and Superintendent Joel Klein in which a privatized, business-like approach to education and social service delivery was more than welcome. Over the years, critics voiced skepticism that such an approach could ever scale, since private investors cover a majority of HCZs operational costs.

Perhaps not workable in the present climate, but very possible in a near future, “what works” world where the real money is to be made on hedged-investments in human capital data. It is no coincidence that the hedge fund managers are the ones so eager to help refine these data driven interventions that will eventually have debt-instruments attached. Predictive analytics is their wheelhouse.

With requirements for “evidence based” programs now on the books, ubiquitous computing coming online, and “innovative” financial pilots like the NPX impact security underway, the pieces are clicking into place. This week, the World Economic forum announced a three-year plan to “launch a platform for social sector transformation” in response to “new technological challenges.” Surely outcomes-based government and development aid contracts must be part of this plan.

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View report here.

Gary Cohn, former president of Goldman Sachs who briefly served as Trump’s economic advisor, has long been a member of the HCZ board. During that time, Goldman Sachs led the build out of the US social impact bond market in the aftermath of the 2008 economic crisis. Cohn became President and Co-Chief Operating Officer of the firm in 2006. A decade later, the company was eventually fined $5 billion by the US Department of Justice for “serious misconduct” surrounding the sale of mortgage-backed securities between 2005 and 2007. Just the sort of folks you’d want handling pre-k, education and social service debt instruments, right?

At a 2014 gathering hosted by ReadyNation on early childhood impact investing, Ian Galloway of the San Francisco Federal Reserve noted that not only had Goldman Sachs been a leader in the space, they’d practically created the marketplace “out of thin air.” Listen to the clip. The map below shows the firm’s holdings in pre-k SIBs in Salt Lake City and Chicago as well as the ROCA SIB in Massachusetts.

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Harlem Children’s Zone: Goldman Sachs interactive map here.

Goldman Sachs has also been a pioneer in the development of automated trading. So who is examining the potentially devastating consequences of AI-dictated trades of securitized public debt originating from pay for success contracts? Anyone? Anyone? As “smart city” interests seek to link 5g / Internet of Things (IoT) to public service deployment and digital surveillance and predictive policing of Black and Brown communities is on the rise, “Minority Report” is beginning to seem like a very real possibility.

The Structured Industry Finance Group and the Digital Chamber of Commerce commissioned a study from Deloitte entitled “Applying Blockchain in Securitization: Opportunities for Reinvention.” Page 18 of the report states in part: “In the specific case of securitized assets, and especially those ABS (asset backed security) asset classes where markets have suboptimal levels of liquidity and transparency (read debt tied to the outsourcing of public services via out-comes based government contracts), a Blockchain could fundamentally improve pricing efficiency and deepen the market.” Followed by: “Direct data feeds (read IoT, wearables, screen-based interactions tied to digital identity) from the Blockchain could also make it easier to automate analytics and develop more sophisticated investment strategies and risk-management techniques.”

deloitte blockchain securitization

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I draw your attention to the language: “risk management techniques.”

We cannot escape history. The legacy of the trans-Atlantic slave trade is very much with us. The management of “risk” associated with public service debt securitization, cannot be de-linked from “management” and control of the poor. The data of Black, Brown and Indigenous peoples will be stolen from them, taken forcibly in service of global financial interests. The abhorrent methods of constraint deployed by brutish masters over the centuries are being updated right now in cubicles by coders. The plan is for bondage to be put on Blockchain in time for the Fourth Industrial Revolution. The system is not yet operational. There is still time to disrupt and change course.

This is the fifth in a series:

Read the introduction, Could Newsom’s “Choose Children” Budget Advance Digital Slavery in CA?” here.

Part Two: Accounting Ledgers Connect the Dots: From Jamestown To Harlem and Beyond

Part Three: Interoperable Data To Run Human Capital Hedge Funds

Part Four: Could “Community Schools” Be Today’s Sugar Refineries?

Part Six: Stanley Druckenmiller and Paul Tudor Jones: The Billionaire Networks Behind Harlem’s Human Capital Lab

I wish to express my appreciation for the research of Dr. Justin Leroy, Dr. Tim Scott, and Dr. Calvin Schermerhorn, which informed my understanding of finance and racial capitalism. To better understand our present situation of “surveillance capitalism,” I encourage you to explore their important contributions.