Newt Gingrich on Black Business
The republican candidates had much to say about African-Americans during the recent South Carolina primary. Here an excerpt from a 1993 speech that Newt Gingrich made regarding African-Americans and business that’s causing some outcry:
For poor minorities, entrepreneurship in small business is the key to future wealth. This is understood thoroughly by most of the Asians, partially by Latinos, and to a tragically small degree by much of the American black community.”
Is this a true statement? Well, yes and no. First, the fact that owning a business can lead to future wealth is indeed true. That happens to apply to anyone however, not just “poor minorities”. In the main, Asians, particularly newly arriving immigrants, do tend to pursue entrepreneurship heavily. The same can also be said for blacks coming from the Caribbean and Africa. Hispanics seem to be heavily into business as well and depending on the area of the country, American blacks may or may not be engaged in starting small businesses. For example, in Northern New Jersey, New York, Atlanta, Philadelphia and other large urban centers, you will find large numbers of black businesses while in other areas you may not. The involvement of American blacks in business really depends on the area of the country you’re speaking of, however, it is true that most American blacks need to understand entrepreneurship as a path to freedom, first and possible economic wealth, second. Fully 80% of most businesses fail within the first five years and those who survive may not necessarily provide vast wealth, but can provide another form of wealth that’s potentially far more valuable–that would be freedom and from that comes economic and political independence. This sort of independence, above every other reason, is the main outcome of more African-Americans going into business. From my perspective, that sort of freedom is priceless.
This is an area that I can speak with some authority on as I’ve direct experience with both starting a small business and advising small business. I’ve been running a Certified Public Accounting firm for 29 years and although my client base is quite diverse now, I started my business servicing African-American communities in Northern NJ and New York and many of those clients remain with me to this very day. Over time, my business expanded to other communities and my clients range from individuals to mid-sized businesses. The bulk of my firm’s services are oriented towards tax, accounting and consulting work and generally in all instances, my firm’s clients are looking to me for advice, so some of the things I do directly impact the growth and viability of the client’s business which has a sort of symbiotic relationship to my own firm’s growth. In other words, the situation is such that as the client’s business grows, they need more services which means that my business grows as well. So as I commit to help them grow, I grow my own business at the same time. Central to my philosophy in business is the concept of win-win. Win-lose is never sustainable while win-win feeds itself. As I’ve remarked on several occasions in this blog, it’s the win-lose proposition that’s at the heart of America’s economic problems.
As my business has grown outside of the African-American community, I’ve come in contact with a wide variety of people with diverse views and philosophies. At times, very different than my own, yet we still do business. I really can’t say that I’ve lost out on opportunity owing to race. Perhaps I have and didn’t realize it, but I think I’d know. It’s been my experience that people do business with those who establish competence and who they like and come to know. I need to also say that I’ve always opted to operate in the broad marketplace and I’ve never participated in a set aside or any minority business sort of program where extra points are given because one is a minority or women owned firm. I’ve not found these things attractive because they don’t align with my philosophy. I do understand why they exist and I do understand that an argument can be made about an old boy network that amounts to affirmative action for white firms, but getting involved with this has never been my thing. I operate and compete in the broad market and that’s where I comfortable with the odds of winning or losing.
Strange as it may seem, I’ve found the dynamic of race in business far different for me as an independent businessperson versus when I was employed in corporate America. As I mention above, I’ve really not found race to be an issue while I’ve been self employed, however it was THE issue when I was in corporate America and this was truly a burden that had to be borne along with all the other stuff one had to contend with. Why the difference? I’ve thought about this often and I guess a good analogy is going into a Chinese restaurant to buy lunch. You go in there because you want the food and you really don’t care who’s behind the counter. Of course, if the place looks like a wreck and the food smells like it has toe jam in it, you’re not going to want to have any part of the scene. So if you can establish that you’re competent and honest while proposing a winning proposition, most people are going to do business. In this sense, entrepreneurship is a great equalizer.
My business was started wholly due my complete dissatisfaction and wholesale rejection of corporate America and working for someone. The racial politics I encountered was a huge part of my dissatisfaction. A job change wasn’t going to cure the problem. There was really nothing for me to do other than start my own business. I’m not the sort of person who likes to play political games, engage in water cooler talk, pretend I like you when you disgust me or put up with the nonsense that you’re expected to endure to get a paycheck. It’s an unnatural environment. I couldn’t do it nor could I make myself do it. I really had no choice, so I took the lemons and made myself some lemonade.
The first thing that’s done when you go into business is choose freedom and because you choose freedom, by default you’re electing yourself to be a leader. So my thinking wasn’t really about riches or anything like that when I started. The main thing I wanted was freedom and the thing that rang in my mind was this quote from the great abolitionist and escaped slave Frederick Douglass:
“ Find out just what a people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them……The limit of tyrants is prescribed by the endurance of those they oppress.”
I don’t do “endure” very well at all and Douglass’ words called out across the century telling me what I had to do. After I started out on the path for freedom looking for my North Star, I figured I needed to make some money and was able to begin getting that sorted out, but that’s another story that could literally yield several posts and most likely a book. I tell you, I’ve learned a lot from running a small business. It’s literally a life classroom on a great many things I never expected. I just thought I’d be doing accounting, but it turned out to be much more than that—but I’m digressing.
I’d like to return to concept to the importance of Black business and rather than speculate about whether Gingrich is a racist for having said what he said, let’s put a positive actionable spin on what he said and glean out what’s true. One of the reasons why the African-American community faces the challenges it faces is for lack of organization and a related problem that arises from that is a lack of capacity. In other words, we lack the capacity to fully utilize any help that may come our way because we’re not organized to direct it, manage it and maximize it. The result of this is empty promises from the political system, symbolic gestures or promises to stamp out racism. This is all we get, because that’s all we have the capacity to accept and manage. Of course, if the African-American community developed broad based capabilities to organize and build internal capacities, concerns about racism or what folks are saying would dissipate as we’d be too busy taking care of business to even care what was said (By the way, that’s why I don’t care. It’s not that I don’t abhor racism, I just don’t have the time or inclination to get overly worked up about what someone says, thinks or writes). Moreover, our relationship to the political class would change from being a collective supplicant to actually driving an agenda which supports whatever we’ve got going on—or we might not even need them at all.
Within the African-American community, the core of leadership comes mainly from either the social justice ranks or from church leadership. Frequently, those coming from the social justice perspective lack the organizational and managerial skills to execute broadly on something that’s sustainable while being wholly financed internally. Whereas there are some churches that are doing great work, they can’t get very political due to restrictions arising from tax laws governing non-profits and political involvement. This same stricture happens to apply to many non-profits like the NAACP and other black non-profit organizations. (Recall there were situations under Bush where there were threats to pull the NAACP’s non-profit status due to it getting too political). When you add this to the fact that many of the organizations that are supposed to represent us get the vast majority of their funding from corporate America and others since there’s no capacity to develop internal funding streams, then it’s easy to see why we’re unorganized and powerless. He who writes the check, controls the process and there’s no place where this is more evident than in the African-American community. We are not organized internally to shape and fund our own agenda. Instead it’s being done for us.
There are two groups of African-Americans who have the organizational and managerial skills to organize and execute. This first group are those who are employed in corporate America. These are Dubois’ talented tenth, yet they too are controlled and funded by someone else and this effectively mutes them for fear of job loss. The second group is the entrepreneurial class. Any successful entrepreneur knows how to organize, execute and raise money. Moreover, any business is generally based on solving some problem and the most successful businesses are those who solve the biggest problems. So, any successful business person is going to have strong organizational skills and possess expert problem solving abilities and in a community that is both unorganized and full of problems, individuals with this skill set are sorely needed. Since they’re effectively self funded, there’s no threat of job loss and since they have freedom, they’re free to act. There’s historical precedence with this in the stories African American entrepreneurs like Madam CJ Walker, Robert Sengstacke Abbot and others.
So, in the African-American community, business formation is about a different sort of wealth building. It’s really about the sort of wealth that comes from freedom not only for the entrepreneur, but for all of us as they lead by executing. But whether that sort of wealth can be built is reliant on the philosophy of those so engaged and what the community asks of them. The best of business is always win win and when there’s a symbiotic relationship between business and the development of a community, it is indeed a powerful combination. That same relationship needs to exist between the political class, those we trade with and etc.
I don’t view entrepreneurship as a panacea for all the ails the African-American community, but the entrepreneurs are a class of leadership that heretofore hasn’t been at the table in the numbers it should. Much of that is owing to not enough people electing to go that route and/or those who taken the leap still caught up in the struggle to make sure their business survives. Developing this leadership class is really a numbers game in the sense that more people electing to go this route will produce more successes.
Running a CPA firm is like being a canary in a coal mine in the sense that you see first hand the broader economic trends, both positive and negative. One of the biggest things I’ve seen over the past few years is the absolute erosion of good paying mid managerial jobs. These are jobs that normally pay well within six digits that have simply gone away due to outsourcing and/or technological advances and they will not be replaced. Many of these people are highly educated and well trained and are being forced to become either accidental entrepreneurs and/or pursue other forms of employment that’s not the normal corporate career track which is now being now increasingly rolled up and eliminated.
One of the potential outcomes is more highly trained and educated African-Americans finding themselves being in the position of being accidental entrepreneurs. Many people don’t do things until circumstances force them to and in a way this is a positive for the African-American community. The best and brightest, some of whom faced some of the same frustrations in corporate America similar to my own, may return their talents to the community. Depending on the shape and direction this takes, this may augur well for the African-American community.
The Ewing Marion Kaufman Foundation does several studies on entrepreneurship and one particular study buttresses empirically what I’ve observed. It has found that despite the recession, entrepreneurial activity is up and that African-Americans are showing the greatest increases in business creation rates while still lagging other groups however. The fact that this is occurring is a driver for my own business or for any other business who is positioned to support this trend. Why is this? Because everyone of them needs an accountant. I would further suggest that this trend has been in place for years and that much of the business I have in the African-American community is as a result of it. Here’s another statistic that the reader needs to be aware of. Less than 1% of all Certified Public Accountants in the country are African-American and of that 1%, even less are involved self employed in public practice. (Also, there’s a general shortage of experienced CPA’s similar to that which characterized the nursing profession years ago). Here’s a question: What do you think can happen to a African-American CPA, who’s in short supply to begin with, in a community where the numbers of folks going into business is growing and who need your help?
You’re going to be busy because the numbers are in your favor and that applies to any business who positions themselves in a similar manner. This is why groups like the Koreans have taken over the Black hair care industry. They’re filling a need that we’re not positioned to address. It’s all about looking at trends and your positioning vis a vis the predominant trend. Because we’re too busy responding to the Newt Gingrichs of the world, we fail to see that our fixation on these sorts of things leaves our back door open for others to take care of things we should be doing. Our entire infrastructure is geared toward the pursuit of social justice and much of that is being financed on our behalf while there is little infrastructure in place to actually develop the African-American community. No one is going to do that for us. We have to do that ourselves. Effectively, we’re unwittingly participating in our being gamed and it’s my eternal frustration that few people see this.
Let me put it this way. Suppose I have a waiting room full of clients waiting to be serviced and rather than dealing with them, I’m out on the street protesting, marching and complaining about not having clients. Since, I’m not doing what’s directly relevant to serving the clients who are waiting for me, I shouldn’t be surprised when someone else opens shop to do what I should be doing. Basically, since I’m not properly positioned, I leave the back door open for someone else to come in and make the money I should be making–and this is what is occurring in the main in the African-American community. Needless to say, there’s a reason why people are financed to do this as opposed to open businesses. There are some who actually want us focused on issues other than taking actions truly relevant to conditions on the ground.
As I said, it’s not that I don’t abhor racism, but I really don’t have time to worry about what Gingrich says or even to discern whether he’s a racist or not. It’s not relevant. What is relevant are those clients (figuratively speaking) in my waiting room and there’s too much work to do to address their needs. Our thinking needs to become far more entrepreneurial in this respect and once it does, we’ll experience a sea change in the African-American community and that’s the real importance of black business.