Many middle-class people of my generation earned money after school by working in a local grocery or received helpful advice from the corner-candy-store owner. These were the places where people exchanged ideas and dreams, where they passed wisdom, values and leadership to the next generation. The storekeepers were personalities"Captain," “Doc” or “Pop”’–who presided over traditional neighborhoods. In many minority communities today the children go into such places, and nobody shares their experience of life. This is not the fault of the recently immigrated shopkeeper who is working hard to make a living but a sign of failed national policy that has cut short our generational communication lines. We need to fix that.
The Korean-Americans who have started small businesses in many U.S. cities over the past decade or so have shown that with start-up capital, management skills and lots of hard work, neighborhood enterprises can succeed. The trick is to help minorities obtain the first two elements, so they can profitably apply hard work to building businesses in their neighborhoods. Success would have an enormous economic impact on poor minority areas because locally owned small businesses generate the highest mumber of neighborhood jobs per investment dollar.
Entrepreneur-education programs for small businessmen should become standard at prestigious business schools like Harvard, Stanford and Yale. If business education is so valuable for executives of large corporations, why can’t we structure programs that would teach neighborhood entrepreneurs the nuts and bolts of small business? These include purchasing practices, inventory controls, receivables financing, collections, insurance coverage and competitive bidding procedures, to name a few.
What else can be done? Cities should sponsor “fairs” at which government and private purchasing agents help vendors fill out often daunting bidding forms. Xerox and Johnsonand Johnson, with well-designed programs that train and finance minority vendors to supply their corporations, are examples for others to follow. And wholesale food-distribution centers like Hunts Point Market in New York could be enlisted to teach new storekeepers to buy produce, inventory and stock shelves, while major accounting firms might lend a pro bono hand in helping them keep the books.
And then there is the most tempting-and the toughest-nut to crack: housing construction. Tempting because so many minorities have the needed skills. Frustrating because the risk profile of construction projects is so high that institutional fire walls exist between the minority contractor and the contract: access to capital; lack of track record, inadequate support operations in accounting, architecture and law. My experience as deputy mayor of New York City from 1983 to 1985 showed that minority contractors tend to be faster and cheaper builders in their own neighborhoods than outsiders–once they get the job. How can we help bring this about?
One way is to team an experienced nonminority developer with a community-based builder. The former has the experience and ,skills to bid the contracts and the confidence of lenders that he will complete the job if it runs into trouble. A possible formula is to have the developer guarantee the financing of 10 percent of the project, in return for somewhat larger profits.
Start-up enterprises require seed money. Loans to fledgling enterprises will produce more than a banker’s “acceptable” default rate of about 1 percent. The government must be prepared to make these loans, even if it means taking a 25 percent or more default rate on them. This must be looked upon as an investment in human capital.
The total investment is not that big. All the programs I have mentioned could be set up in more than 100 cities and towns, creating approximately 50,000 new businesses and 100,000 jobs per year, for less than $3 billion annually. This is the cost of just three stealth bombers and is far less than America’s out-of-pocket costs for the Los Angeles riots and their aftermath.
Recently, a U.S. senator told me that minority-oriented economic-development legislation would have little chance of success in Congress because “such programs stink of quotas.” But evenhandedness and aiding minorities need not be inconsistent. Programs that are open to everyone in similar economic circumstances will nevertheless help the most impacted minorities if eligibility follows neighborhood poverty census data.
It’s time for the minority community to claim responsibility for its own destiny. A serious minority consensus on a political agenda has been lacking since the civil-rights movement. Minority leadership must kindle a national agenda along economic and educational lines. The community needs to take a forward step, from access to opportunity.
