Challenges of Black Economic Development

Slavery and its Legacy.
The Five Colleges Learning in Retirement (5CLIR) 2005 Memorial Series
Session #4 – March 23, 2005, 
Museum of Fine Arts, Springfield

LEGACY 

Henry Thomas III, Moderator 
CEO, Springfield Urban League

Joyce Everett
Smith College School for Social Work

Glenn Davis
Springfield Urban League

Dean Robinson
Political Science, UMass Amherst

“CHALLENGES OF BLACK ECONOMIC DEVELOPMENT:”
Discrimination and Access Issues

Introductions (abbreviated) by
Ted Belsky, 5CLIR
Joe Carvalho, President, Springfield Museums
Henry Thomas, CEO, Springfield Urban League.

BELSKY:  It’s a pleasure for me to welcome you all on behalf of the Five Colleges learning in Retirement Program to this our series, Slavery and Its Legacy. Those of you who have attended previous meetings of the series, know that the purpose of these evenings is to help us expand our knowledge of the historical impact of slavery on our society and its consequences for our own times.

 Just to give you an idea of how we’re going to proceed, I’m going to introduce Joe Carvalho, president and CEO of the Museum Association and afterwards I will introduce Henry Thomas III, president and CEO of the Urban League, who will both moderate and organize the remainder of the discussion this evening.

First, I want to thank Joe Carvalho, who was instrumental in allowing us to come to Springfield and use these facilities this evening. Joe is, as I said, president and executive director of the Springfield Library and Museum Association. He holds an MA in American History from the College of William and Mary, and a Master’s in Library Science, in Library and Information, from the University of Rhode Island. Joe is a certified archivist and certified genealogical records searcher. Prior to becoming president, he served as director of the Connecticut Valley Historical Museum, and supervisor of Local History and Genealogical Library Archives. He served as associate editor of the historical journal, Massachusetts, for twenty-five years. The author of several books, including Black Families in Hamden County from 1650 to 1855. He is a nationally recognized as a specialist in African American genealogical research. Joe also served for ten years as the Book Review Editor for the National Genealogical Society Quarterly, and above all, he is a good friend, a colleague that I have had the pleasure to work with in the past, and I thank him very much for joining us this evening. Joe, if you will.

CARVALHO:  Thank you for coming out tonight. It’s a pleasure to host this program in Springfield. Several months ago, when Ted first called, my first reaction was to say, “Ted I haven’t heard from you in a while. It’s great to hear from an old colleague. We used to work together on several projects and frankly, I was prepared to say yes to whatever he asked me. But this was an easy thing for me to say yes to, because the topic has been of interest to me for some 25 years.

 We talked about how important the topics are in this series and that it would be desirable to bring them to Springfield. I thank you, Chuck and the committee for including Springfield in the program. Thank you very much. And finally, as a citizen of Springfield, someone who has worked for the community, who has worked with Henry Thomas and Glen Davis overt the years – they are two fine gentlemen, leaders in the community, who have done so much. They always have my support.

BELSKY:  Thank you, Joe. It’s now my pleasure to introduce Henry Thomas, III, President and CEO of the Urban League of Springfield. Among his many accomplishments are these: Mr. Thomas serves as the president and chief executive officer of the Urban League of Springfield. He has worked in the Urban League movement for thirty-four years. He began as youth and education director in 1971. He also serves as CEO of historic Camp Atwater, which is the oldest African American summer youth residential camp in the United States. Mr. Thomas serves on a number of local and national boards. He is vice chairperson of the board of directors for the Massachusetts Department of Education, founder and current chairman of the board of directors of the New Leadership Charter School, chairman of the board of trustees of the Springfield Cable Endowment, and former chairman of the Springfield Fire Commission and Police Commission, respectively. In addition, Mr. Thomas has served as a visiting professor at the University of Massachusetts and also at Curry College. He received his Bachelor of Arts in psychology and a Master’s Degree in human resource development from American International College. He holds a Juris Doctor from Western New England College School of Law. He’s completed post graduate certificate study at the Kennedy School of government at Harvard and has received an honorary Ph.D. degree from Westfield State College and Bay Path College. For these and for many personal reasons-I can remember Henry as far back as when he was a student at AIC. I can remember him as my leader in the Sunshine Rotary, where he put me up to many nefarious projects. So, indeed, it is a pleasure to have him, to welcome Henry who will organize the panel discussion with the panel.

THOMAS:  Thank you and good evening. It’s a real treat to be here for a couple of reasons, but first and foremost my former professor here, Ted Belsky, really was one of the progressive professors on our campus at American International Campus and he was always thinking down the road, and being a history professor, I guess that’s what was intended? Right? As well as looking backward. But he introduced me to oral history, as relates to the power of oral history and my predecessor, Alexander B. Mapp was one of the first subjects of oral history who was based here in Springfield and was the director of the Urban League for some thirty odd years and I remember when Ted took, I don’t know how long, to really get all of his story documented and he’s deceased now, but his sister is in the audience. I want to recognize her. I call her “Moms,” and that’s Mrs. Josephine Mapp Edmonds, and her husband Howie Edmonds. So Ted is a dear friend and it’s really a pleasure to be here this evening with you all.

I want to welcome and thank you for coming out, under the threat of inclement weather. I’m delighted to serve as your moderator this evening, for this august panel. We really are going to have a good evening. After I introduce them to you, you’ll know why.

One might ask why are we discussing the topic of slavery some one hundred and forty years post legalized slavery? The answer is fundamental. We cannot appropriately and adequately discern the resolution of those still pesky social and economic challenges of today, without understanding the full context of the Black and White experience of this country. In essence, the residue and implications of a pervasive institution called slavery still plagues the life space of many Americans. These symposia will help us further learn, know and take action on what we know, thus enabling all of us to enjoy the fruits of this society.

That is why the Urban League of Springfield is extremely proud to take part in the organizing committee for these symposia, and so we thank you for inviting us. I think that the Five College Learning in Retirement, it took me a while to really focus in on that ‘in.’ It’s not A-N-D, but I-N, because it didn’t make any sense to me if it was A-N-D. I just want to put my bid in now that when I venture to that status in life, that you would accept me to be part of your group. Thank you.

I was up at five o’clock this morning preparing to travel to Boston for some DOE, Department of Education business, and my wife was asleep, but lo and behold, I went into the bathroom and there was a note on the sink, and then I went downstairs to the kitchen and on the counter there was a note from my daughter. Both ironically were the same subject matter, and the notes read, “Dear,” and in the case of my daughter, she doesn’t call me “Dear,” she said, “Dad.” “Dear Dad. Moderator means you don’t give the speech.” [laughter] So with that in mind let me introduce you to our distinguished panelists, and I’m going to welcome them to the podium in the order that I introduce them -and then they’re going to share about fifteen or twenty minutes of their thinking on the topic of today, which is Challenges of Black Economic Development, Discrimination and Access Issues. After that fifteen-minute period, they might get a little nudge, and after the twenty minute period, that infamous hook, you know, comes from somewhere. Joe Carvalho has made arrangements for the hook.

But let just introduce first Professor Joyce E. Everett from Smith College, School for Social Work. She is the co-director of the doctoral program, a good person to know. She has a Bachelor of Arts from the infamous Morgan State University in Baltimore. We have to talk about some of the Morgan stories that I have, and share some people in common, I’m sure. She also has an MSW from the University of Michigan, so she’s something about blue. And she holds her Ph.D. from Brandeis University. Professor Everett’s broad and scholarly understanding of the sociological implications of behavior and policies that have a strong nexus to the legacy of slavery will bring great value to our discussion this evening. The other point that I want to make is that Professor Everett is involved in current research activities in the areas of kinship care, cultural diversity training, child support enforcement and family resource centers.

The next gentleman is no stranger to me, of course. He is the senior vice president of economic and workforce development for the Urban League of Springfield, Glenn Davis. Glenn Davis has twenty years of banking experience as an underwriter and commercial lender. He worked for Fleet Bank, now more commonly known as Bank of America. He is director of the Mason Square Community Development Corporation, which is commonly known as a CDC, and is the youth pastor at First Cathedral Church in Bloomfield, Connecticut, the largest African American Church. I call it a ‘super church,’ in New England. Glenn understands economic development from a practitioner’s point of view, as well as an enabler via his banking responsibilities. Glenn serves on numerous local and state housing and economic development boards. He has a Bachelor of Arts in management and economics, and is completing his Master’s Degree in management this spring.

The Urban League gets involved in some pretty interesting and sometimes intense and controversial work and because of that, I felt it was important to bring somebody on staff that had a divine connection, in case we need divine intervention through some of these barriers that we have to scale. So Glenn has served several purposes on the Urban League staff, but we are really pleased to have Glenn and the talent that he brings to the table.

Last and certainly not least, we are fortunate to have Dr. Dean Robinson, professor of political science at the University of Massachusetts. Dr. Robinson currently teaches courses on race in American politics, and American political thought. Again, he does that at the University of Massachusetts. He joined the university in 1993. Dr. Robinson was awarded a two-year hundred thousand dollar fellowship from the Center for Advancement of Health and the W.K. Kellogg Foundation to study health disparities and he did that at Harvard University, Center for Society and Health. Dr. Robinson examined the causes of health disparities by race, ethnicity, gender and socio-economic status and considered policy solutions. He, too, will bring a profound perspective to this evening’s topic, and we’re glad that he made it. He can tell you about some of the excitement in his family that almost caused him to give his apologies, but we’re happy that everything worked out. He received his degree, his Ph.D. from Yale University.

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Remarks by Joyce Everett, Smith College School for Social Work

EVERETT:  Let me first say that I’m very happy to be here and to participate in this event and let me also say that it’s nice to be flanked two men, two Black men on top of that, and to be the first one to speak.

I have to say that it’s also a pleasure to entertain the question or the issue of the Challenges of Black Economic Development, Discrimination and Access Issues. I’d like to start by saying basically that Lyndon Johnson, former President, probably spoke most directly about slavery’s legacy for Black economic development in the late 1960s, when he offered the following statement. “You do not take a person who for years has been hobbled by chains and liberate him, bring him up to the starting line of a race, and then say ‘You’re free to compete with all the others,’ and still justly believe that you have been completely fair.” Now, not surprisingly, I think Johnson’s words capture in large measure the state of Black economic development in 2005.

Let me just give an overview of Black economic development or the state of Black owned businesses, at least up until 1992. From my own research, I’ve discovered that since 1972 the number of African American owned firms has steadily increased with an almost fifty percent growth from 1987 to 1992, and that growth seems to be highly associated with the location of African Americans. That is, the growth is greater in those states that have population-that have African Americans at a population rate of larger than 12.1%. So for example, in cities or states such as Georgia, Florida and Virginia, where the Black population exceeds 12.1%, you find a higher rate of Black owned business. Now, it isn’t also surprising that many of these businesses are really focused on service, industry, retail and construction. Moreover, that these businesses started with less equity capital on average than White owned firms. That Black owners were less likely than other owners to have received bank financing for their businesses and that prospective lenders were four times more likely to deny credit to Black owned firms. I’m going to assume that the rest of the panel can pick up on some of these points.

Given this general profile, then, what are some of the challenges that I see for future Black economic development? I’m going to basically mention three, but I’d like to focus in on just one. The first challenge I think is just the availability of capital. You need capital to support any kind of minority business, either to expand the business or to start a new one, and access to capital really restricts Black business ownership, as well as the size of that business. Now, a major source of capital for many business owners is really personal wealth, as opposed to loans. While the number of wealthy African Americans may have increased in the last ten years, with such personalities as Oprah Winfrey and Bill Cosby and of course P-Diddy Combs, most African Americans lag behind their White counterparts with respect to the accumulation of wealth. So one major source of wealth for most Americans is equity in a home. However, fewer than fifty percent of African American families own their own home, compared to three-quarters of Whites. It’s clear that Blacks are denied mortgages and home improvement loans at twice the rate of Whites.

So increasing access to capital would greatly improve the prospects for Black economic development. I think equally important to Black economic development is the need to expand and create business opportunities that are broadly appealing to a wider consumer population. That is, we need to increase the demand for those products and services that are provided through Black owned businesses. Traditionally, Black owned businesses have operated in what can be described as a protected market, and it’s a protected market mainly because Black businesses have been basically segregated and because of racial discrimination, have really catered to a clientele of African Americans for the most part. However, with desegregation and the current global economy, it isn’t always the wisest thing just to appeal to African American consumers. So the wider the demand, the better for the African American business.

I think the point that I would like to focus a little bit more attention on is the fact that Black economic development is also driven by human capital. What kind of human capital exists within the community? It is the community’s ability to provide well trained, well skilled and an educated workforce that really fuels the development efforts, whether those efforts are geared toward expanding existing businesses or attracting new ones.

In addition to insuring that there’s a well trained, educated workforce, it’s also important that we try to reduce the departure of persons with high levels of human capital away from African American communities, which from my point of view may be a serious problem or a concern for places like western Massachusetts. Now, whenever we focus on human capital that leads us to closely examine the education of Blacks and the issues of racial discrimination and bias.

Racial discrimination and bias was historically inherent in the public education system for Blacks in both the South and in the North, and I’ll just briefly review a little bit about this history, although I’m sure that you have learned so much more during this whole series about the history of slavery and of African Americans. It’s obvious that during the pre Civil War period the education of Blacks was almost nonexistent, except in those isolated instances in which plantation owners or others attempted to teach individual slaves to read independently. In the North, freed Blacks were more likely to have training in reading and writing, due in part to the efforts of abolitionists. But what were the significant factors that led to the improvement in Black Southern and to some extent Northern schools for Blacks?

I’m just going to mention, I think, four major significant factors that have been well documented in the literature. The first I think was the Port Royal Experiment, located in South Carolina, which was an experimental project that preceded the establishment of the Freedman’s Bureau. It was an experiment designed to offer some sort of training to former slaves in certain types of trades. In 1865 the first federal aid program, the Freedman’s Bureau, was established by Congressional action as a temporary relief agency, offering a variety of services to both freed slaves and also Whites. Those services ranged from transportation to distributing food rations to Whites and freed slaves, medical supplies, hospitals, orphan asylums for children, schools for Black children and it is also credited with the founding of Howard University, Atlanta University and Fiske Universities, as well as Hampton Institute and Talladega College. Now, the Freedman’s Bureau was also very significant because it was the first federal welfare program ever established in this country and it was very limited in its duration. It ended some three years after its establishment.

I think perhaps another very significant factor in the improvement of education for Blacks was really the involvement of private philanthropy by northern foundations during the early 1900s. These foundations, which included the Rosenwald Fund, the Jeans Fund and the Slater Fund, basically provided capital for the construction of public schools for Black children in rural southern areas of the country. The efforts of these foundations were tremendous because they impacted not only the construction of schools, which were basically normal schools. They were elementary schools, if you will, but they impacted the length of the school term. In the rural south, the schools were only open for Blacks during the harvest period, but these foundations set out some guidelines which extended those terms of school. They also provided training for teachers, as well as some supervision of teachers. It is also important to note that these foundations tended to favor vocational education, as promoted by Booker T. Washington. I should note as well that these were separate schools for Blacks, during a period of Jim Crow, and that government, both county and state governments were less willing to finance public education of Black children. Remember, this is the era of the doctrine of ‘separate but equal,’ as established through Plessey versus Ferguson. In addition, let me also note that church organizations, both in the South and in the North, were very responsible for improving the education quality for Black children.

I also want to make note of the fact that these foundations and private philanthropists were not only involved in creating and increasing the number of normal schools for Blacks, but they were also very instrumental in establishing predominantly Black colleges and universities. In 1854, there was only one predominantly Black college in the country. However, by 1973 there were over a hundred such institutions. These institutions, like the hospitals, financed through charitable giving and private physicians became in many respects the institutional base supporting Black economic development during the 1900s. This is a particular interest of mine, which is that Black hospitals in the 1900s totaled about-

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They provided employment for African Americans surrounding or within the neighborhoods of these hospitals. What I find also interesting is that today an estimated eight to twelve of these hospitals still exist, which really suggests something else about the need for future policies to support some of the heritage of African Americans.

Finally, I think a third significant factor affecting the improvement of public education for Blacks was undoubtedly the litigation that was filed by the NAACP between the years 1920 and 1954 that challenged the doctrine of separate but equal and ultimately led to the Brown versus Board of Education case. Whether racial discrimination and bias still exist in public education for Blacks is difficult to document. However, we do know that there are persistent and increasing differences in academic achievement among Blacks and Whites and that is still a very serious concern. The Black-White achievement gap seems to show that African American children arrive in kindergarten or first grade with lower levels of school readiness than White children. They have lower oral language skills, pre reading skills, pre math skills. Lower general knowledge and behavior less well suited for the school’s learning environment.

Three-fourths of the gap in African American cognitive skills at kindergarten entry may be accounted for in social class and background differences between African Americans and Whites. So that there is a confound or an interaction of class and race. Low income and ethnic minority students do learn just as much as White middle class children learn when school is in session. However, studies seem to show that low income children tend to fall back over the summer, actually forgetting some of what they learned during the previous school year. Whereas, the skills and knowledge of middle income children tend to continue to increase during the summer months. This is also confounded because many African American children are attending schools in low income communities and they’re attending schools that are not financed at quite the same level as suburban schools and are being taught by teachers who may not be as well qualified as those that are teaching in suburban schools.

There are lots of explanations bantered about regarding why there is an academic achievement gap between Whites and Blacks. These range from genetic theories, theories that suggest that Blacks are inferior, to those that account for the differential based on inequities in the distribution of resources to schools. Some theories address the racial composition of schools, as well as ability grouping and tracking processes in schools. Some theories focus on family background, the characteristics of the families in terms of number of children, marital status of the parents, etcetera, and lastly there are some theories that are cultural explanations, some suggesting that Black students often reject educational achievement as an avenue for success and others that suggest that being a minority person represents a stereotypical threat and that children will respond in the opposite direction if they perceive that others are viewing them from a stereotypical position.

I’m going to stop there. [laughter] Since I’ve been handed the slip.

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Remarks by Glenn Davis, Springfield Urban League

DAVIS: I’m the culprit now. Thank you, Dr. Everett. To the conveners of this insightful forum and to my colleagues here, and of course to Mr. Henry Thomas, the gentleman who signs my paycheck, I will be extremely kind. If I need to take the rap for this one, don’t worry about it. I got it. And to you, of course, good evening.

I’m really honored to be here and to share in this forum. For me to think that I’m an expert in the field is ridiculous. I know there are others that are brighter than I, but I’m really pleased and humbled to be able to share in this experience. The topic of economic development is something that is really close to my heart. It’s something that’s near and dear to me, and so when I thought about preparing for what I wanted to talk about and how I wanted to shape my discussion points, one of the things I thought would be helpful is to just begin by defining the term “economic development.” In perusing various documents and literature that I had available, I came up with this definition that I think really fits the context of where we’re really trying to go. It says that economic development is defined, “as the qualitative improvement of the economic subsystem that is concerned with the production, consumption and distribution of goods and services to meet human needs.” In other words, putting it in plain language, basically we’re talking about strategically directing resources and assets to benefit communities, so that those communities become vital and vibrant and so that those communities are in such a way that they can collect, store and distribute their assets.

I’ll come back to that, collect, store and distribute those assets. But that’s the context for economic development that I wanted to talk about because it is not race specific, when you talk about economic development. But in this context, it is race specific in the sense that when we look at all the socio economic indices in our country, we know that-and within the African American community, we suffer disproportionately, just about on every front, whether it’s healthcare, wealth income, education and literacy that Dr. Everett has talked about. So that’s really the context that I wanted to talk from, and then provide some-I guess some experience that I’ve had, being in the banking industry relative to those gaps.

When I look at and analyze American history, one of the things that’s clear to me is, you can categorize that history into three different periods of time or revolutions. The first being, obviously, the agricultural revolution or that period from 1619 to 1864 that really established slavery. But there was in each period, I think, a response by African Americans to the experience that they were encountering. So during slavery, I think the moral imperative of the time was really just seeking freedom. Our ancestors pretty much spent their energies, they lived and died just to seek and to gain freedom.

Then right after slavery was abolished we went into the beginning of the industrial revolution and that particular period of the industrial revolution, required manpower, human resources. So while they were mass producing products and services for which they needed bodies, one of the things that I believe characterized the African American experience was that we needed to really become concerned about civil rights and civil liberties. So we spent the next one hundred years probably fighting for those civil rights and dignities.

Right after 1964 really kind of ushered in that technological revolution, the information age that we’re experiencing even now. But again, there was an experience, I think, for the African American community that really shapes the conversation that we’re probably having here now. At that age, you know, slavery had been abolished, so we weren’t fighting for freedom in that same context. The Civil Rights Act had been passed. Voting rights had been passed, so we really weren’t fighting for civil liberties and civil rights, but I think the moral imperative that was thrust upon African Americans at that point because of where we were moving as a society, was really empowerment through economics. So economic empowerment, economic freedom is really one of the things that I wanted to talk about, as it relates to where we are today. Because that economic empowerment is really, in my mind best accomplished through entrepreneurship. If we can close the wealth and income gap, I believe the economic empowerment through entrepreneurship, then that last moral imperative will insure that African Americans can truly experience and express freedom.

I say that because despite the gains that we have-that have been attributed to the civil rights and voting legislation, collectively African Americans remain on the sidelines economically. Now, when the disparities in wealth and income exist, they do so within our community. What happens is that our community is enabled, but has an insufficient amount of resources to really contribute to the needs of our community. Consequently, the ripple effect is what we see, I believe, in joblessness, homelessness, the distress communities, the health disparities, the poverty as a result of our inability to really capitalize on the economic assets in our community.

So from an economic perspective, in order for a community to be sustainable, vibrant and vital, it must harness its ability to collect, store and distribute the assets within that community. To that end, money really needs to circulate about eight to nine times within a community, for that community to be a vibrant community. Within the White community, particularly within the Jewish community, money circulates about nine times. In other words, what happens when an individual goes to work, they get their pay check? They’re trading and they’re bargaining within their own community. They’re trading within their own culture and that money continues to circulate before it actually leaves. What happens when you have that type of turnover is that those communities are able to build institutions within the community. They’re able to build the banks, the retail stores, able to build other major businesses that really begin to hire within and allow that community to be sustained.

Conversely, in the African American community, money turns over one to two times. So what happens is that the moment I get paid, I actually take my dollars, that pay check, and I trade outside of my community, and when I trade outside of my community, then those that I trade with, really have no allegiance to really funnel that money back into my community. As a consequence, this is when you get into the distressed communities because there’s really no reinvestment of resources within the community.

One of the things, that in doing my research, I found that there was a study done by the Department of Commerce, a 2001 study that, while African Americans are 12.7% of the population, they only own 4% of all US corporations. They were 12% of the population, 13% basically, own 4% of the corporations and yet these firms produce .4% of all total revenues and contributed .7% of total employment. So what’s really striking about that is that while we’re 13% of the population, we contribute very minimally to creation of jobs, creation of businesses, which businesses pay taxes and taxes continue to fuel economies. So what happens is we find ourselves often in the situation where we’re the last hired and the first fired because we’re not really working in organizations and companies where the owners look like us and so that’s a problem.

On the flip side, conversely when we think about it, 85% of all US firms are owned by non minorities. 85%, and they contribute 97% of the gross receipts that are produced in this country. They also contribute 90% of all jobs that are available. So that in itself is a big gap. That’s a big disparity. So that’s why I say that I think the last moral imperative for African Americans is really through entrepreneurship because unless we can find a way to collect, store and distribute that capital within our communities, then we will continue to be in a pervasive condition of impoverishment.

Another striking statistic from the average gross receipts is that for African American companies in 1987, their average annual receipts were about eighty-seven thousand dollars. The average White business owners average annual receipts, was one point one million dollars. So that’s a big gap, and what happens when you have a million dollar a year company is that you begin to have some options, what to do with that capital. You can take that capital and reinvest it back into the company to grow the company so you can take it to the next level. You can take that money and reinvest it into assets, investments, and the net result of that is you really begin to build your business and personal net worth.

As of 2002, the latest year for which this data is available, the median Hispanic household net worth was seventy-nine hundred dollars. The median Black family net worth was six thousand dollars. By contrast, the median White family was ten times both the Hispanic and the Black, at least ten times and had a collective net worth of about eighty-nine thousand dollars. So approximately ninety-thousand dollars, and I’m talking about net worth. That’s when you subtract your liabilities from your assets and you come away with that you’re really worth. So that’s saying that there’s a big disparity there in terms of what is happening within White America and what’s happening in your minority communities.

Finally, there’s a report commissioned by Target Marketing News and this report was just phenomenal. In 2003, Black households had an annual earned income of six hundred and fifty-six billion dollars, yet with that income, they still, going back to the statistics that I read earlier, contributed only 4% of all the gross business, all the gross firms in the country, only 4%. So there’s a real stark disparity there. With that type of economic purchasing power, we really have the potential and the capability to really fuel the entrepreneurship and empower ourselves entrepreneurially that I’m talking about.

Now, there are still some barriers that exist. Obviously, we wouldn’t be here talking about it if there weren’t. I think they’re-going back to the theme, there are a couple challenges that I see, as it relates to African Americans achieving economic equality and parity. One is capital, having access to capital to start, sustain and to grow your small businesses. That is critical. I work in the banking industry and we were talking about this at dinner prior to coming over here. One of the things that happens to African American entrepreneurs is that they’ll walk into the bank with a business plan, a sound idea, and they’ll ask for X dollars, and they’ll get approved for X minus 1. In other words, what happens is that for an African American applicant, their application or their request will actually get ratcheted down from let’s say two hundred thousand dollars, they will get seventy five thousand dollars. It seems like it’s always just enough to get them in trouble, and in banking you can borrow too much and get in trouble and you can have not enough money to also get in trouble. So what happens is these businesses, even when they’re starting, they’re starting at a disadvantage and so they’re always playing catch up because they were under funded, to begin with. But it’s critical that access to capital, that whole dynamic, really has to change to the extent that we can actually get the capital that’s being requested. All things being equal-I know that philosophically I say that, but I also know that from a banking perspective there’s some credit guidelines and standards that must be adhered to.

But again, I’ve sat in committee meetings and I share this because it’s really phenomenal. Prior to moving to moving to New England, I covered western Mass and northern Connecticut. That was my territory. My real estate portfolio included multi family building and office buildings and I can’t begin to tell you how many times in my portfolio, as a work out loan officer, I saw applications from borrowers that were non recourse loans. In other words, basically, when I talk about a non recourse loan, if the borrower decides not to pay, I have no recourse to go against the borrower, notwithstanding the assets that they possess. That’s unthinkable. That would really never happen to a Black applicant. That would never happen. What I find is that Black applicants have to actually come to the table for a loan application and literally sign over their first born. So that’s one of the things that happens. No access to capital.

The other thing that’s important is cooperative economics. There has to be-we have to get to a place where we begin to contribute and collectively harness our resources. With six hundred and fifty-six billion dollars in earned income, clearly that significant amount of a revenue base, so that we can actually begin to buy businesses and create the type of wealth that’s needed.

The other thing is that we need to become producers, not consumers and I say that because in looking at those statistics about the earned income of the African American community, we are cleared to become consumers in terms of buying non appreciating assets. We’ll buy cars, boats, houses, those type – well, not houses – but a lot of depreciating assets. When we constantly do that, then we’re actually throwing money away because at some point the useful life for that life asset will go away.

The other thing, and I’ll come back and talk about this, is just having a credit consciousness. In other words, being credit savvy and I know that philosophically there’s some gaps there, but I’ve also seen in the banking industry that some of this is behavioral, in the sense that there’s some things that we as an African American population and community can do to better ourselves, but a lot of it is also legislative and I think there has to be a mind set in the financial markets in the banking community that if we’re going to move the African American community to parity, that we have to really look and be fair in terms of how we evaluate credit requests and credit applications across the board.

Where I sit now, I don’t see that happening. Back a year and a half ago, there was a study done here in Springfield, a mortgage disparity study, and one of the things that that study bore out was that even at higher income levels, African Americans were declined at a significantly higher rate than White applicants. It’s almost four to one, and this is at higher income levels. So it’s an income issue. So the question comes back to, why does that happen? Clearly you have to look at, you know, a pervasive racism and attitude toward how one evaluates a White application versus a Black application.

I can’t begin to tell you the times that I’ve sat actually in loan committees and even the level of conversation, the discussion about two applications will be entirely different based on just an inherent sense of one’s from an African American entrepreneur and one’s from a White. Consciously or unconsciously, I know it happens and I’ve experienced it. They’re just two levels of conversations.

So I think one of the things that, you know, as we talk about those challenges, those challenges are real, but it really takes all of us in the room, not only just to have these conversations, but really when you look at the mortgage disparities, when you look at the small business disparities, more has to be done from an institutional perspective to insure that access to capital and the ability to grow and create wealth remains and is elevated to a different level. Thank you.

==========================================

Remarks by Dean Robinson, University of Massachusetts

ROBINSON:  First I’m delighted to be here and have an opportunity to share some ideas. My field is political science and I’m currently immersed in health policy and health disparities research, so you won’t be surprised that my comments on economic development are going to have something to do with health.

I think the first challenge of black economic development is to understand what is generally meant when we use the phrase “black economic development.” Generally, when we use that phrase, certainly when you’re thinking about it in terms of government policy, we’re usually talking about what combinations of grants and loans can provide cities with the resources that they need to create jobs, to promote entrepreneurship, particularly in distressed areas of the urban landscape. The government does that because positive trends in the national economy often pass over cities, as evidenced by the boom of the 1990s. Fresno, California, Buffalo, New York and many other cities did not benefit from the general boom in the economy that you saw over the course of the 1990s. So that’s generally what Black economic development or urban development means at the federal level.

When we hear that phrase in more popular discussions on black radio, television and in rallies, black economic development often refers to promotion of black entrepreneurs. Sometimes you hear this idea coupled with the idea of pooling the substantial money that blacks as consumers spend into some sort of trust or other collective effort. This idea was floated at the Million Man March some years ago.

These are strategies that obviously need support, yet these views I think see black economic development as a more or less distinct domain of human activity that has mostly to do with markets and having the resources to compete effectively in them. Discrimination and access from this perspective is about fairness in the allocation of loans and grants.

I would suggest, however, that this view of Black economic development is somewhat incomplete. Education, as Professor Everett suggested, is arguably as much a precondition to Black economic development as are grants and loan guarantees. Having access to healthcare and more importantly having good health is a precondition to economic development.

If black economic development means something more than the promotion of businesses and entrepreneurs, if it means something more than that, however, I think we ought to think of Black economic development as something more like building capacity in individuals and groups to function in the modern economy. To do that, I think we have to talk about health as a crucial variable.

We start with the well-known observations that blacks in the United States bear a disproportionate burden of disease and death. The general pattern has been clear for a long time: Basically as long as the Centers for Disease Control have bothered to look, you can see two broad trends. One is that the health of Americans, black and white and other, have improved over time, but two, -there is a persistent gap in health between blacks and whites that has persisted over time and on some measures, like infant mortality it has widened. In fact, if you look at the black-white gap in infant mortality, it was lower in 1950 than it was in 2002, which is pretty astonishing in light of the fact of the economic boom of the late ’90s.

A recent analysis by former Surgeon General David Satcher and colleagues at Morehouse, found that blacks suffered 40% more deaths in 2002. That’s eighty-three thousand five hundred and seventy-three more than would be expected if they had experienced the same death rates as whites in America. This is referred to as excess deaths. More shocking is that an African American male born in Washington, DC, can expect to live 57.9 years. That’s lower than the life expectancy of the male citizens of Ghana, West Africa (58.3), of Bangladesh, (58.1) or of Bolivia, (59.8). Blacks suffer more from chronic diseases like hypertension and diabetes than do their white counterparts. As another example, black children with asthma are much more likely to be hospitalized than white children at the same income position.

Part of these differences have to do with access to healthcare. We know that roughly 20% of blacks in the United States under the age of sixty-five do not have health insurance, compared to about 10% of whites under the age of sixty-five and we know why that is. The reason is first because neither the federal nor state governments provide universal healthcare. That is why the United States has today close to forty-five million Americans without health insurance. Second, and related, is that most Americans get their health insurance from their employer. The fact that black unemployment is today double the white rate explains part of the gap in insurance coverage. Second there is evidence of unequal treatment in the clinical setting. The Institute of Medicine published a massive report, in excess of six hundred pages in 2003 titled “Unequal Health.” They found that even when studies compared people of similar age, sex, type of insurance and other relevant factors, people of color did not always receive the same diagnosis and treatment for their illnesses. So there’s no doubt that access to healthcare and treatment within the clinical setting is part of the statistics that you see.

But beyond healthcare, we know that black people are sicker because we generally are lower on the socio economic ladder. This is fundamental. In all the nations of the world, even rich nations like Great Britain, Sweden and France, where healthcare is guaranteed, individual and group health follow a step-like pattern. The poor suffer more disease and death than the near poor. The near poor suffer more than the middle class. The middle class does worse than the other upper class and the affluent do the best, in a step-like fashion. They refer to this pattern as “the gradient” and the gradient pattern is true for mental health, for heart disease, for AIDS for asthma, for diabetes. It’s true for pretty much any measure of disease or death that you’d care to look at.

We know that socio economic status explains most of the black-white differences in health as well because that step-like gradient pattern is true within the Black population, as well. Infant mortality, which measures death within the first year of life, is higher for Blacks with less money and it improves as you go up the socio economic ladder.

So I’m suggesting that socio economic status is the fundamental explanation of the difference in health that you see, and you know that because even nations that provide universal healthcare, are marked by that step by step gradient pattern. Even within the Black and White population, if you look at AIDS prevalence, if you look at cancer death rates, it follows this tiered pattern. If socio economic status is the fundamental determinant of health, it makes sense to ask why and new research suggests some reasons.

Very briefly in terms of the research, and I think this overlaps with some things that the other panelists have said, socio economic status affects how much exposure an individual or group is going to face to the various things that increase your risk for death and disease. The Environmental Justice Movement has looked at how neighborhood segregation sometimes increases the risk of exposure to harmful chemicals. Social risks include things like stress and violence – both aspects of the human experience that are tied to ill health – and both aspects of the human experience that are a function of wealth and income. What you find in studies is that it’s not the states that have the highest percentage of poverty that have the highest homicide rates. It’s the states that have the widest gap in income between the rich and poor, and that’s true of cities as well.

Health promoting behaviors matter. Diet and physical activity, but this too is largely a function of socio economic status. Among other things, it costs a lot of money. Gym fees, organic fruit, granola, you know, and the other things that health behavior entails, cost a lot of money. Let’s not forget, as well, that certain communities are targeted with massive ad campaigns to promote smoking, alcohol and bad dietary habits. Socio economic status is important to health, too, because exposure to health promoting things like proper nutrition, physical activity, good education and a stress free environment affect health over one’s lifetime.

Conversely, the harmful exposures tend to be bundled and we know for instance that material deprivation suffered in the womb and early childhood can affect people’s health into mid -life and beyond. Healthcare and healthy environments are important to cognitive and physical development of kids. Disadvantages children suffer in early years are usually hard to make up later in life. Educational disadvantage typically translates into occupational and income disadvantage, and this has implications for health.

The composite picture I would suggest is a healthcare system and a social environment context that today reproduce longstanding inequities in American life. This has profound implications for black economic development because in many respects, as I suggested before, good health is a precondition to active participation in the economy and other essential aspects of life – like politics.

Of course, understanding the health dimension of black economic development travels some distance from the more narrow definition of development that we typically think of in this society. I think that the way we think about Black economic development, with less attention given to things like education and health, and I’d add other things like housing and job training, reflect national and state trends in politics. In a very simple illustration of this point, we can look to the fact that education, health and urban development are separate departments of national government.

Indeed, since the end of the Civil Rights Era, the broad trend in economic and social policy has been toward the promotion of free market solutions to enduring social problems and away from government intervention to enduring social problems. Why is there not a bold national policy on black economic development? We could ask the same thing about health and education. To answer that question, I think we go past city and even state level politics toward the developments that have helped the Republican Party dominate the national domestic policy agenda, at least since 1994. And I’m going to stop there, without notes from the Moderator.

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