A recent news report caught my attention and led me to a federal government website. I found what I was searching for on page 106 of the behemoth 464-page Concurrent Resolution on the Budget-Fiscal Year 2018.1 Embedded in a list of bulleted points under the heading Commerce and Housing Credit was the dreaded information: “Consolidate the Minority Business Development Agency into the Small Business Administration.” This is one of the many strategies outlined in the fiscal year 2018 budget as a way to eliminate “…waste, abuse and duplication…” in the federal government, The budget was passed by both the House and the Senate.
Let us step back a bit and try to understand the relevance of the Minority Business Development Agency (MBDA) and the reason why the decision to “consolidate” is viewed as a threat by many. On March 5, 1969, then President Richard Nixon created the Office of Minority Business Enterprise, which blossomed into the present-day MBDA.2 The purpose of this office, which is housed in the U.S. Department of Commerce, is to provide funding for minority businesses, as these businesses are more likely to be denied loans at higher rates than white-owned businesses. The MBDA reports on its website, that minority-owned businesses contribute over $1.4 trillion to United States annual output, and account for 7.2 million jobs. The move to “consolidate” the MBDA should therefore, be troubling not only to the business owners who will be affected, but to anyone concerned with the growth of the United States economy.
Black business ownership is not a new phenomenon in the United States. In spite of the horrors of enslavement and institutional discrimination, Blacks have historically sought the independence of self-employment. Whether enslaved and seeking income by hiring out oneself, or modern-day street vendor or barber, or doctor, or lawyer, Black men and women have embraced entrepreneurship at all economic levels. Thus, the more I think about the federal government’s decision to “consolidate” the MBDA, the more I am convinced that Black (and other minority) businesses and their supporters must collaborate and develop a countervailing strategy if these businesses are to survive the decision. This thought leads me to the story of Black Wall Street and its eventual destruction, which, in my opinion, is a cautionary tale for all ages.
Take a step back in time with me, if you will. The year is 1906, forty-three years after the signing of the Emancipation Proclamation. Enter Mr. O. W. Gurley, whose parents had been slaves. Mr. Gurley is a wealthy man, not because of his inheritance of the promised and never delivered forty acres and a mule, but rather, because he has had the foresight to purchase forty acres of land in Tulsa, Oklahoma. Mr. Gurley’s vision is to establish a Black community on the land. Racist? No! Such were the times – segregation, Jim Crow, and outright racism were the order of the day. Mr. Gurley’s dream was realized in the form and substance of a thriving, self-sufficient, affluent and powerful community of Black people, many of whom had migrated from Mississippi. In its heyday, this community in the Greenwood District of Tulsa was home to amenities such as banks, movie theaters, hospitals and hotels. At least six of its residents owned planes. The houses had indoor plumbing. There was an excellent school system in place to educate Black children. And, as an economist, I must mention that the velocity of money was high, in other words, money circulated within the community for almost a full year. It is no wonder that this community was christened “Black Wall Street”.4
The high socio-economic status of the residents of Black Wall Street drew the ire and envy of whites, and made the community a sitting target. In May 1921, an accusation of harassment by a white woman against a Black man was the literal match that set off a conflagration that destroyed Black Wall Street. In an effort to ensure the safety of the accused, Dick Rowland, a group of Black men went to the courthouse where an altercation ensued with a group of white men. This was the beginning of an assault on the Black community that lasted 18 hours. When it was over, 35 blocks had been destroyed, 300 people had been killed, and 10,000 people had been left homeless – Black Wall Street was no more!5
I said earlier that the story of Black Wall Street should be a cautionary tale. “Cautionary” because although the methodology used to repress Black advancement may have changed, the objectives remain the same. No one will argue against eliminating waste and duplication in any organization, public or private, but history does repeat itself, and Black and other minority business owners should be united in their concern about this latest move in the 2018 budget. So, what now? To Black business owners, I say, unity is strength. If you are not a member of a small business association, join one! If there is no small business association in your area, start one! As members of a business association, you can work together to create alternate sources of funding in view of the reduction that appears to be imminent due to the planned consolidation of the MBDA.
In an earlier blog post, I wrote about the su-su, a community savings system that originated in West Africa, spread to the Caribbean through slavery, then to the United States and other countries with the migration of Caribbean people. However, this type of saving system is not unique to these areas of the world. In South Korea, the system is known as kye; in Japan, as tanomosiko, in the Middle East, it is called gam’eya. In every country, the objective is the same – to encourage sustained community saving. There is undocumented information that small business owners in the United States are already involved in su-su-like arrangements, pooling their money as a group, and paying the full amount collected to a different member each month. Black business owners, this is one sure way to create your own source of funding. Take the challenge – adopt the su-su in its original form, or restructure it to your own likeness! The basic model is sound.
But access to money does not guarantee that a business will be successful, as I am certain business owners know. Customers are looking for a good product, excellent service, and value for money. Among other things, businesses must effectively market their products, provide good customer service, and be sure that their accounting is impeccable. All things considered, I continue to circle back to the theme of unity. Black business owners, economic theory explains that resources are scarce and wants are unlimited, thus competition is inevitable. You may be competing for scarce resources, but as the saying goes, you must hang together or most assuredly, you will all fall apart.
businesses are identified as businesses owned by African Americans, Asian
Americans, Hasidic Jews, Hispanic Americans and Pacific Islanders.
Bernice J. deGannes Scott, Ph.D.
By Alexisrael (Own work) [CC BY-SA 3.0
(https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons