The number of black people involved in Melaleuca or Tahitian Noni or Mary Kay is significant, particularly among the middle class. To a certain extent this should put to rest the idea that black people aren't interested in starting their own businesses because they are too enamored (too brainwashed) by mainstream society. Given the recent news about the rise in poverty rates particularly among African Americans, we shouldn't necessarily be surprised that blacks are attempting to either supplement their income or replace lost earnings through such efforts. But reading Or Does It Explode for the Black Politics class I'm teaching really points to some of the pitfalls blacks tend to face that make it difficult to get out of wage slavery simply through entrepreneurship.
Or Does It Explode takes a look at Harlem during the Great Depression. Unlike other recent attempts (John Jackson's Harlemworld comes to mind) Greenberg's work does an excellent job of grappling with the politics, economics, and culture of black harlemites and how their life choices were truncated by larger political and economic processes.
Talking about how the Great Depression combined with racial discrimination to severely impact black economic options, Greenberg notes that many black professionals started their own businesses. They did so desiring to serve the black Harlem community, but also to make money for themselves. But they faced significant hurdles:
Black businesses were generally poorly capitalized and thus could not compete effectively against better financed whites. Instead, blacks moved into low-profit fields and competed against one another for a smaller share of the market....If blacks had had needs peculiar to themselves that only other blacks could provide (like Jews who needed kosher meat, for example) black stores could have competed successfully against white, even with higher prices. By and large, such was not the case...For most services, larger and better-financed white establishments competed successfully against black ones in the same neighborhood. They could often offer the same products at a lower price, or provide a more varied selection. (p.27)
Often pundits and jackleg theorists blame either black consumers (black people are just too brainwashed to support their own, unlike X ethnic group), or black producers (black producers are just too trifling to provide good service) without considering the basic principles of Econ 101. The one arena black people have not so much a monopoly but a decided market advantage is in the area of culture...which is why most of our wealthiest individuals are culture workers. Which brings us to The Crisis of the Negro Intellectual.
Posted by at September 27, 2003 12:26 PM | TrackBackIf the dollar moved within the black community so many more times, why was the profit margin of black businesses so small?
Posted by: lkspence at September 27, 2003 05:21 PMProfit margin was not the reason for the scarcity of Black entrepreneur's in the case in Detroit it was eminent domain (freeway system)that force BLACKS to move to neighborhoods with establish stores .
Posted by: Tootsie at September 28, 2003 01:17 PMTwo comments:
1. Your comments contradict one another. Either there were a number of black businesses and they failed due to integration, or there were a few black businesses and they failed due to urban redevelopment.
2. Harlem/NYC and Detroit differ in one important way...Detroit had a much stronger manufacturing base. But besides that blacks in Detroit and Harlem had similar problems...what black businesses there were had low profit margins, were under capitalized, and had to compete with wealthier white businesses. Very difficult to succeed under those conditions.
Posted by: Lester Spence at September 28, 2003 09:18 PMI would add that I think the scope of black businesses were always limited to the one demographic. The few businesses that did not cater to a captive black audiences generally survived integration. (I am thinking about general contractors and auto dealerships).
Black banks and insurance companies suffered as all such small institutions vis a vis economies of scale and variety of products & services. Here in Los Angeles, it was many years before banks like Founders, Family Savings and Broadway got onto ATM networks.
Posted by: Cobb at September 29, 2003 08:41 AMI think i saw it already, do not remember where though.
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During the depression and post WW11 years there were stats battered about ,how many times a dollar change hands before it left the black community.A dollar would change eleven or more times before exiting the community,mainly due to segregation ,which catapulted black entrepreneurship into that void.Now a dollar is lucky to pass thru two hands before exiting,integration,intimidation,and assilmilation slowed progress towards business for self, versus regular j.o.b.
Posted by: Tootsie at September 27, 2003 01:02 PM