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Black Capitalism – Fulfillment or Failure?

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(NNPA) In light of what most of us know about the economy and where Black people fit, mostly as consumers rather than producers, a discussion of Black capitalism is in order. The term was promoted by Stokley Carmichael in 1966 as part of the “Black Power” movement, but came into vogue in 1968 when the Nixon administration adopted it from a proposal by Robert Kennedy. Black capitalism originally called for loan assistance, credit guarantees, and technical assistance for Black-owned businesses in an effort to stimulate economic development in the ghettos.

According to Black Entrepreneurship in America by Shelly Green and Paul Pryde: [Black capitalism] constituted a movement by Blacks to gain control over the business development of their own communities…Directing business growth in the Black community was considered the first step toward achieving a powerful Black economic presence in the larger American economy. [It] called for a new kind of social contract among racial groups in America – one based on mutual self-interest rather than integration.”

Andrew Brimmer, noted economist and Lyndon B. Johnson appointee to the Federal Reserve Board, had a different perspective on Black capitalism. In the book, A Different Vision: African American Economic Thought, Brimmer wrote, “…the strategy of Black capitalism offers a very limited potential for economic advancement for the majority of the Black population.”

In support of his contention, Brimmer posited, “The ghetto economy…does not appear to provide profitable opportunities for large scale business investment.” He noted a large part of the problem was attributable to “a tendency for affluent Blacks to shop in the more diverse national economy.”

Brimmer suggested that Black capitalism fails because it is founded on the premise of self-employment, as opposed to employment in salaried positions where the rewards are greater and the risks are much lower. (That reality gives credence to Thomas Boston’s “20 by 10” strategy of Black businesses hiring Black employees.) Brimmer suggested that Black capitalism “may retard Blacks’ economic advancement by discouraging many from the full participation in the national economy…” His position assumed that corporations would hire Blacks; but his concern about the greatest risk being placed on those who can least afford to take risks is quite valid. We have several examples of that reality in Black businesses today.

Has Black capitalism worked? Is it working? One thing is certain: Korean capitalism is working. They control the Black hair care market via their stores in the ghettos, where Black folks are their only customers; and Koreans hire their own people as well. This is a great example of how “segmented” capitalism can and does work.

Economist Milton Friedman said, “History suggests only that capitalism is a necessary condition for political freedom [since many nations can be identified that have] economic arrangements that are fundamentally capitalist and political arrangements that are not free.”

History Professor, Dr. Juliet E.K. Walker, wrote, “The existence of Black entrepreneurship… provides an example of an economic arrangement in this nation’s antebellum free enterprise system that was fundamentally capitalistic, but within which some of the capitalists, the African Americans, were not fundamentally free.”

The problem with Black capitalism is structural inequity due to a paucity of government support. Just as the government has subsidized large corporations, it should do the same for Black businesses. The International Journal of Humanities and Social Science (November 2012) carried a paper written by Ryan Very, titled, “Black Capitalism: An Economic Program for the Black American Ghetto,” in which Very made a good case for government support of Black capitalism.

Here is the abstract from that paper: “The American federal government supported the creation and expansion of economically depressed urban residential areas where blacks live in segregation from whites. These ghettos face barriers to economic development including high unemployment, a low wage labor market, capital drain, and market dualism. Three popular ghetto economic development strategies are ghetto dispersal, corporate branch planting, and black capitalism. Black capitalism breaks the ghetto’s economic barriers better than ghetto dispersal and corporate branch planting, but it will only be possible with significant support from whites and the federal government.” In other words, the government caused the problem, and the government should fix it.

Very continued, “Black access to capital coupled with subsidized entrepreneurial training services would…allow more residents to start their own potentially successful businesses in the ghetto. With a sizeable government subsidy, ghetto residents could even build manufacturing plants. If ghetto residents would export enough manufactured goods, both the drain of capital and the (neighborhood) trade deficit would decrease.”

Until Blacks understand our economic and political positions in this country, we will continue to languish in what Ron Daniels calls, the “Dark Ghettos” of either or, and we will never move to the land of both and.

Jim Clingman, founder of the Greater Cincinnati African American Chamber of Commerce, is the nation’s most prolific writer on economic empowerment for Black people. He is an adjunct professor at the University of Cincinnati and can be reached through his Web site, blackonomics.com.

Russia is Not the Only Aggressor

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(NNPA) I have found myself getting a bit nervous as I hear various U.S. politicians rattling their swords in response to the Russian aggression in the Crimea. Before we lose our minds in this crisis let’s consider a few things.

First, there was a revolution in the Ukraine that, no matter how justifiable, put into office a new government that from the beginning was quite hostile to Russia and to ethnic Russians in the Ukraine.

Second, ever since the final years of the Soviet Union, the USSR and later Russia have pulled back militarily from Eastern Europe, only to see an expansion of NATO that the U.S.A. promised would not happen. An expansion, it should be added, that has been pressing up against Russia’s borders.

Third, Western Europe has a demonstrated history of provoking or encouraging secessionist movements, as it did in the former Yugoslavia, and/or encouraging smaller nations to provoke Russia, as it did in the case of the Georgian Republic.

Now, none of this excuses Russian aggression. None of this lets Russian President Putin off the hook for inflaming ethnic nationalism in Russia and the Ukraine. But what this does help us to understand are the conditions in which this aggression took place and that the West, specifically Western Europe and the U.S. are not blameless.

The United States has been willing to engage in all sorts of military aggression within the Western Hemisphere when the ruling elite believed that its interests were in danger, whether that was against Haiti in the 19th century through today; Cuba; or the countless interventions in the Caribbean and Central America. Despite this history, U.S. politicians have been acting as if they have never even heard the word “aggression” in the context of U.S. foreign policy.

Senator John McCain (R-Ariz.), for example, has offered rhetoric that would lead the uninformed to believe that U.S. foreign policy has been guided by nothing but sweetness in comparison to the policies of the Russians. I believe that Senator McCain, and the Obama administration for that matter, need to re-read a bit of the history of U.S. foreign policy.

Before we hear any more discussion of sanctions and military force in connection with the Russian/Ukrainian crisis, it is instead time for a different approach. There needs to be an actual honest broker who starts speaking with both sides to pull everyone back from the brink. If that is not the United Nations, then perhaps it can be an assortment of countries from Europe and the global South. “Discussions” and “negotiations,” in either case, should be the watch-words.

In the meantime, class is in session for our politicians on the history of U.S. foreign policy. Anyone ever heard of the works of Howard Zinn, for instance?

Bill Fletcher, Jr. is a racial justice, labor and global justice writer and activist. He is a Senior Scholar with the Institute for Policy Studies and the author of “They’re Bankrupting Us” – And Twenty Other Myths about Unions. Follow him on Facebook and at www.billfletcherjr.com.

Apple Rolls Away from its Roots

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(NNPA) Apple’s success story is a familiar one: a group of misfits who grew an unlikely startup from the confines of a small garage into the world’s largest business. From the company’s iconic logo to the off-beat leadership of the late Steve Jobs, Apple’s public image has always invited the idea that it holds an equal bite at the apple for everyone. It seems quintessentially American – except it isn’t – and the tech giant’s efforts to eliminate its competition are perilous for the African American community.

In recent years, revelations about Apple’s business practices – from evasive tax schemes to protracted courtroom battles – have gradually pulled back the veneer on a company that leaders from Washington to Wall Street have begun to question. Digging in its heels against shifting market dynamics, Apple has shown a troubling side, one prepared to disrupt competition and trample consumer interests.

This month, a U.S. district judge rejected Apple’s request for a permanent injunction on Samsung smartphone sales on grounds of patent infringement. The ruling marks the latest chapter in a three year courtroom battle over features such as autocomplete and slide-to-unlock technology. Juries have already awarded Apple nearly $1 billion in restitution.

Regardless, Apple is headed back to court again, this time to dispute the operating platforms of newer model Samsung phones. Its demand this go-around: a $40 royalty per phone or tablet sold, which some experts have called “objective insanity.” It doesn’t take an economist to forecast the impact of such a levy; the fee will get passed along to consumers in the form of higher device costs.

Unable, or unwilling, to compete in emerging markets, Apple appears resolved to instead play outside the lines and drive up the costs of more affordable devices, which have gained significant traction in recent years.

According to a Pew Research study, African American and Hispanic consumers are more likely to access the Internet through their phone than others. Smartphone ownership is growing among this demographic as well, due largely to more affordable devices. Last year, devices costing less than $200 made up 43 percent of all purchases, more than twice the level of 2011, according to the International Data Corporation (IDC).

Coupled with greater access to broadband and wireless, the drop in smartphone prices is helping close the digital divide along racial lines. Studies show African-Americans have about a 15 percent greater ownership of smartphones than the public and spend more time online with them. More than 70 percent own an Android phone, compared with less than 60 percent of all consumers.

Increasing mobile usage rates alone has important implications for small businesses. A Neilson study last year found African Americans are more likely to make purchases using their phone and spend twice as much time at personal hosted websites than any other group. This has a very real impact on our small business members who have invested in websites that can handle online sales.

Apple finds itself falling behind in this digital revolution as rival phones running the Android operating system now dominate the market. One might assume Apple’s answer to its troubles would redouble focus on its product development.

Instead, the company has doubled down, mechanically rehashing and rolling out the same products. There is only a handful of Apple smartphone models on the market today, while there are several dozen smartphones that are equipped with the Android operating system. In fact, Apple hasn’t shipped a new format phone since 2012. The average price difference between an iPhone and an Android phone has grown to $374, and an Android now costs half as much as an iPhone.

So, if not through greater innovation or competitive pricing, how does Apple hope to hold its own in the marketplace? It appears by closing down its competitors’ markets through courtroom litigation. Simply put: if you can’t beat ‘em, ban ‘em.

Starting in 2010, Apple noticeably stepped up its litigation against others. The company recently appealed the court’s rejection of the ban Samsung phone sales (it was the second time the court dismissed the bid), likely as a grounds for further action against its competitor’s newer model phones.

Apple’s latest charge, that Samsung should pay a $40 fee per device, promises to drive up costs and leave consumers in the lurch if approved. The biggest impact of such a decision will fall on the shoulders of lower income consumers, who will effectively be priced out of the marketplace and then their Internet access could be limited.

Equal opportunity is tenet of the America promise. In today’s increasingly connected world, an individual’s location, race or income should not determine whether or not he or she has access to online information and resources. Let’s ask Apple to defend the same principles that fostered its success.

Harry C. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce®. Website: www.nationalbcc.org Email: halford@nationalbcc.org.

Don’t Wait for Obama to Fight

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(NNPA) Alright team, here we are again approaching the midterm elections. Having won both the 2008 and 2012 presidential elections, we have to notice that Obama, who is an excellent campaigner, simply does not seem to know how to fight once he has the task of governing. He either concedes ground prematurely, e.g., freezing federal workers’ pay, or becomes oddly passive. In the lead up to the 2010 midterm elections this resulted in the disaster of that November. We are now approaching November 2014 and it feels like more of the same.

Waiting for Obama to stand up and fight is pointless. While he may be forced into a fight, as in the situation of the government shut-down of 2013, we have to be clear that it is simply not his preferred activity. He seems to believe that he can somehow stand above the chaos despite the fact that there are those who, at every turn, seek to cut him off at his knees.

Rather than despair, it is time to take President Obama out of the equation. November 2014 must be about the issues that are of most importance to regular people and about candidates who will fight for them. Let’s start with healthcare. There is little question that the Obama administration bungled the roll-out of healthcare reform. But it is more important to acknowledge that we needed something stronger and more universal than the Affordable Healthcare Act. In fact, we needed Medicare for all.

The Republicans advocate nothing approaching that. They want a return to the past and if they succeed in getting a majority in the Senate, they will aim to do just that. So, here are my questions which you should ask yourself and your friends: What will this mean for seniors? What will this mean for people with pre-existing conditions? What will it mean for young people? You see my point? So, not only do we not need what the Republicans are offering, we need more than what Obama offered. That means candidates who stand for Medicare for all.

Let’s try another. The Republicans were really upset about the Stimulus of 2009. Well, without that, the economy would have remained in freefall. The Republicans had no answer for that. They still don’t have one. Yet, the Obama stimulus was not enough. It was not enough in terms of the total dollar amount but it was also not enough in the manner in which it was utilized. We need to have an economic redevelopment program that promotes new industries that address the environmental crisis. We need economic redevelopment that focuses on the occupants of the dead and dying cities where the private sector will not invest. We need economic development for states like West Virginia that have been losing industry and must change their economy for the sake of the environment and their unemployed. We need a bit of economic planning to get us out of this mess. We need to elect candidates who stand for a different path.

So, as we look towards November 2014 let’s stop the whining and get busy. Waiting for President Obama to raise the flag of fighting back is, at best, wishful thinking. But the results of November 2014 are more important than how we are feeling about Obama at this moment. They need to be grounded in the sort of future we want for our families. Let’s roll.

Bill Fletcher, Jr. is a racial justice, labor and global justice writer and activist. Follow him on Facebook and at www.billfletcherjr.com.

‘Gainful Employment’ Rule Throws Black Students for a Loss

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(NNPA) Last week, the Obama Administration declared war on 1 million underserved students pursuing higher education throughout the United States. While the president and first lady launched their campaign to make it easier for low-income minority students to access college, the Department of Education has launched an unprecedented assault on this same community through a new proposal that will cut thousands of college programs that disproportionately serve poor communities, single working mothers, veterans and other at-risk populations. At a time when American employers desperately need an educated, skilled workforce to sustain economic recovery, a confused and conflicted White House is hurting the underserved communities it claims to support.

On March 14, the Department of Education published its new proposed “Gainful Employment” rule. The rule is a rehashed patchwork of regulations concocted several years ago in an attempt to prevent abuse of the federal financial aid system. Rejected through legislative process and shot down in federal court only a few years ago, the administration has nonetheless resurrected the policy and repackaged it in an 841-page proposal that will decimate college programs and career-focused vocational training currently serving one million students.

The proposed regulation, which applies primarily to proprietary (for-profit) colleges and universities, would make academic programs ineligible for federal Title IV financial aid if they fail to meet arbitrary formulas primarily related to student debt and earnings a few years out after graduation. Put more simply, students who don’t command high enough starting salaries relative to their student loans will find their programs eliminated without any solution for continuing their educational career.

If the rule is enacted as proposed, thousands of vocational training and educational programs will disappear, creating an $8 billion shortage in the higher education market and many aspiring students left out in the cold. Students pursuing careers in public service, which often pay lower starting salaries, like teachers, social workers, nurses and other allied health careers will be barred from receiving the same federal aid as their peers seeking high paying jobs. The same is true for those pursuing their passions in culinary training, design, animation and other careers in the arts. This will hurt employers like hospital systems, hotels, restaurants and food service companies who heavily recruit qualified talent from programs threatened by the rule.

Perhaps the biggest problem with the ill-conceived Gainful Employment rule is that it discriminates against programs that are sought primarily by low income minorities and other non-traditional students. From poor working families, to single mothers to veterans and other special needs communities, there are millions of Americans who don’t fit the mold or plainly weren’t accepted for a typical college experience.

In order to gain the skills, training and credentials needed to secure and maintain a job, many of these individuals enroll in proprietary vocational programs. President Obama’s Gainful Employment rule penalizes these programs almost exclusively while applying completely different standards for private non-profit schools with the exact same curriculum. At the same time, the schools who serve more affluent populations of traditional suburban teenagers are protected from the president’s biased standards.

Not only is the Department of Education proposing an unprecedented program that discriminates against certain types of schools, the Obama administration has not produced any plan to compensate for the loss of 6 million students who will be displaced and dejected before the decade is over. No regulation of this type and this complexity has ever been enacted in higher education. The collateral damage of this proposed rule is great and the risk to these communities and to our fragile economy is very real.

Another reality is the plight of ex-felons. Finding full time employment is a very difficult thing to accomplish when you have a record. The only professional license an ex-offender can earn is that of a barber or beauty license. With this a person can find work or even become an entrepreneur by way of owning his/her own establishment. It can be a lifetime of progress. But no, this rule will end any chance of that happening anymore.

As the United States continues its slow economic recovery, it’s critical that the public and private sectors collaborate closely to provide all individuals with the resources they need to get the education and training required to participate in our modern workforce. As we have seen time and again, aggressive, ambitious policies designed to improve social programs for the underserved should be applied fairly and pursued carefully after thorough due diligence.

The Obama administration’s current rule will immediately and unfairly targets 1 million underserved, at-risk college students throughout the nation, and ultimately discriminates against the communities it proposes to serve. This will hurt employers, vulnerable students and our economy. If the president truly seeks to protect and expand low income access to college while addressing the issue of student debt, he needs to start by rethinking his misguided Gainful Employment crusade.

Harry C. Alford is the co-founder, president/CEO of the National Black Chamber of Commerce. Website: www.nationalbcc.org Email: halford@nationalbcc.org

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