Why the Black Community NOW Needs to Focus on Economic Empowerment

It was recently reported in new research that a Black man with a college degree is about as employable as a white high school graduate. The average Black household makes $20,000 less a year than white household.

Over a 40 year work career at a 6% compound interest if we invested in stocks, bonds, or a business that is 3.5 million dollars African Americans are losing per family.  Since only about 32% of whites have college degrees, all the income disparities isn't because of Blacks having less education since 82.7% of Blacks have a high school diploma.

If we were to calculate that 2 million out of the 9 million Black families were loosing this type of income due to unexplained social favoritism or racism, that would come out to over 7 Trillion dollars in less income over a 40 year period!  Can you imagine the amount of wealth Blacks could create with 7 trillion more dollars or more?  This is one of the reasons we have the incredible wealth difference between Blacks and whites in this country.

While some people like Dr. Claude Anderson, feel blacks have lost economic footing since integration if you look at the income of Blacks now of 1 Trillion dollars and some Black communities whose average income is almost double that of the average white family you'd see this is a questionable perspective at best.  The Black middle class is much larger now than before integration.  It does still have issues with wealth accumulation.

However conditions of Black Americans would have been even worst if segregation was continued. There is an explosion of Black business, with growth at 60.4% between 2002 and 2007, with Black women starting businesses faster than any other demographic. Also Black women are enrolling in grad schools faster than any other demographic.

There are 1.9 million Black businesses. About 8% of the Black adult population has started a business (about 22 million Blacks over 18 or 50% of 44 million Blacks). There are 14,500 Black businesses currently with revenues over 1 million dollars. I doubt if we would have had so many under segregation since many Black business make over 1 million dollars serving the government or corporate America sectors. Obviously those opportunities would have been closed to us under segregation.

Black businesses have total receipts of 137.5 Billion dollars and employ 1 million people. Currently at 137.5 Billion dollars Black businesses only make up 1/2 of 1% of total businesses receipts in the US. If Blacks could just increase the support of our businesses from 7% to more like 25% we could employ all unemployed Blacks in this country (about 11% or 2.4 million Blacks are currently unemployed).  So I agree with people like Dr. Claude Anderson that we have to focus on Black business development from a community economic base.  I just come at similar solutions from a totally different perspective and I feel we should look at the glass as being half full rather than half empty on Black progress.

I think a community based economic development theory is  doable if we have the will and want to do more than complain. I'm dedicating my life to trying to get more of us to do this. I hope more of us would consider this as one viable strategy to employ.

We have to get a lot more of us to own businesses. Also we should start more microfinance and crowd funding endeavors to launch more viable businesses.We should start national grocery chains and real estate investment firms since food and housing are our most essential needs. Since these things take the lionshare of our income we should own or invest in those essential needs.

When I did a lot of my activist work I noticed we were relying a lot on the major media to tell our concerns and advocacy. We really needed to own more of our own media to tell our story in a more actuate fashion. I think we should work together and galvanize ourselves economically and financially at this point and deal with political power from a position of strength.

I think Blacks with wealth could come together as angel investors or venture capitalists and structure a peer-to-peer finance platform similar to how Prosper.com was started. This way Blacks can invest and make a return on their small capital investments on a large aggregate scale.The investment groups should then recruit managers with business savvy and experience building national supermarkets chains and real estate properties. This way the community buys essentials like groceries and housing from this business endeavor but also gets a repayment of their initial investment too by loan repayments.  We might try starting national food and real estate coops where income is shared with member investors. But first we need national finance organizations.

For instance multi-billion micro-finance organizations like Accion and Grameen Bank have above 90% repayment rate for loans. These are nonprofits and repayment as much as possible are reinvested back in to give more business loans.

Grameen Bank a couple of years ago netted a profit of $20 million dollars.  Grameen Bank was started in one of the poorest regions of the world Bangladesh.  It helped the economy in that poor country.  Grameen Bank is a multi-billion dollar bank extending loans to small business globally now. It even gives people of color in inner cities loans in the US today.  It was started by an Ivy league trained economist Muhammad Yunus.

Professor Muhammad Yunus receives award from
President Barack Obama for his Microfinance Efforts

Yunus went back to his native country Bangladesh, and started giving rural women business loans out of his pocket.  He then got banks to give micro-loans to rural business owners.  Now the bank he started loans out billions and has spun off other businesses.  Grameen Bank now gives out loans to small business owners in Bangladesh and also the US.  It is even exploring relations and operations in developing nations like China.

The Latino microloan organization Accion, the last I read raised over 30 Billion dollars for small business finance. In the Black community we need to do more microfinance and crowd funding like this in our community.  I got business loans of revolving credit for about $10,000 from Accion.  If we've raised a lot of money for political campaigns in our community why can't we do the same in economic development? 

We've raised a lot of money in political contributions why not economic contributions? For instance years ago it was reported that George Bush raised a huge amount of money for his presidential political campaign at 60 million dollars in total. That was considered a hell of a lot of money for a political campaign.

In contrast back in the 2008 Presidential campaign women, young people, progressives, and people of color helped Senator and now President Obama raise over 80 million dollars in some months in his campaign. In fact in one month Obama raised 150 million dollars! In total President Obama raised more money than any Presidential candidate in history with a whooping 750 million dollars! That was unheard of.

I realize all the money didn't come from Blacks. But a lot was done by small donors over the Internet. Why can't we make a shift from just funding politics to funding economic investment?

Especially when we stand to increase our financial viability in this country and get a return in investment. I think the marketing of the tech funding platform should stress the economic return on investment to African Americans and not just rely on the ethnic unity aspect. I think the dollars of the business venture/s has to make sense to all parties concerned.

To see the background stats and research for this article click here

Although I take Issue with a good bit of his analogies
Checkout this Video by Dr. Claude Anderson
On Why We Need More Black Business Communities

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