By Cinque Muhammad
Black America squanders potential power through spending habits
CHICAGO (FinalCall.com)--If Black America were an independent country, its wealth would rank it as the 11th richest in the world, according to a consumer research document that analyzes Black spending power annually.
But, that spending power is being squandered, observers note, relegating Black America to economic slavery, instead of financial freedom.
"The Buying Power of Black America" recently was released by Target Market News Inc. (TMN), a Chicago-based marketing research group. The analysis of Black spending power last year showed that some $631 billion flowed through Black hands. By comparison, the United States ranked first in Gross National Income (GNI), at $9.6 trillion in year 2000 figures.
"That comparison that we published is designed to get people to respect us as an economic force, but the truth is we don’t behave in the same way those nations do. So while the comparison is not totally there, it makes a point that we are an economic force," TMN Editor Ken Smikle told The Final Call. "Folks wonder why we don’t spend more money with us, but the real issue is we don’t have access to capital to build businesses that are convenient to where we shop and where we live.
"Our expectations are understandable because of the centuries of discrimination we’ve suffered, and folks want to see us be the answer to our own problems that we didn’t create. But asking us to go out of our way to do something that nobody has to do because of a circumstance we didn’t create or perpetuate, I think, is unrealistic," he continued.
Mr. Smikle refutes the idea that the circulation of money in a community can be documented. And he argues that economic independence can be arrived at, if Black Americans reach out to build trade relationships with the international market.
"We don’t want to become an isolated community that only circulates its dollars amongst itself. We’re part of the world and we have to spend our money with the world," he said.
But others argue that a focus on circulating more money within the Black community is key to economic empowerment, and that spending power does not necessarily equate to economic strength.
"There is no such thing as consumer power; its an oxymoronic term," claims Dr. Claude Anderson, author of the book, "Powernomics." In a capitalistic society, he argues, producers, distributors and sellers have power over the consumers, and that Black Americans are exactly where they were in 1860 on the eve of the Civil War.
"At that time, 98 percent of the Black people in America were enslaved and we had half of one percent of this nation’s wealth. One hundred and forty years later, when we’re supposed to be free, we still have half of one percent of the wealth of the richest nation on earth."
A major reason for Black America’s failure is the inability to recycle its money within its communities, he implied. Nearly all of Black income is spent directly outside of Black hands, because Blacks do not practice group economics—pooling of money, focusing it into one geographical area and purchasing in a bloc, he added.
A perfect example of group economics, according to Dr. Anderson, was accomplished in the Greenwood District of Tulsa, Okla., in the early 1900s—a time when legal segregation forced Blacks to do business among themselves. Commonly referred to as "Black Wall Street," the area became a nationally recognized entrepreneurial center, as dollars circulated 36 to 1,000 times within the Black community, according to authors Jay Wilson and Ron Wallace in their book on the subject.
Among over 600 successful businesses were 21 churches, 21 restaurants, 30 grocery stores and two movie theaters, plus a hospital, a bank, a post office, libraries, schools, law offices, a half-dozen private airplanes, and even a bus system. On a fateful June 1, 1921, the business district was bombed from the air and burned to the ground in a riot by mobs of envious Whites, including ranking city officials.
Today, there are 38.3 million Blacks in America and over 400,000 Black businesses, according to Dr. Anderson. He claims that in the past 25 years, other ethnic groups have increased their disposable income and out-produced Blacks in wealth because they practice group economics, resulting in the creation of more businesses.
"One out of every 10 Asians is in business; one out of 35 Whites is in business; one out of every 54 Hispanics is in business; and only one out of every 104 Blacks is in business," he said.
Dr. Anderson encourages Blacks to use what he calls competitive advantage in industries where Blacks dominate in consumer patterns or in population.
"If you consume more leather than anyone else, you should be manufacturing leather," he said. "Blacks need to come together, pool their resources, build industries around their competitive advantages and control everything from the resources at the bottom to the manufacturing and production, warehousing and distributing, all the way to retail market at the top, and confine their money by buying Black and selling to any color.
"Otherwise, they will never be able to survive in this society," he said.
Land, the basis of wealth
Dr. Ridgely Muhammad, an agricultural economist and manager of Muhammad Farms, said that the definition of "slave"—a person who has lost control of himself and is dominated by something or someone—describes the economic condition of most Blacks in America.
He points to the Economic Program of the Honorable Elijah Muhammad as a solution to the ills of the Black community. And it starts with the land, he said.
"When I heard the Hon. Elijah Muhammad say that agriculture is the root of civilization, I changed my major in undergraduate school from architectural engineering to agricultural economics," he said.
"The children of Israel were taken out of Egypt and given he Promised Land so they could be a free people. There has never been in the history of the world a people who were free and independent with no land. The number one thing a nation must do is feed its people," he said.
Dr. Muhammad said that the American agricultural economy is being slowly worn down, explaining that 90 percent of family farm income comes from off-farm employment.
To help save Black farms, he proposes that Blacks in each city form a buying group to collectively purchase produce in bulk orders for distribution throughout the community. Several major cities, he said, have buyers clubs successfully underway. He also commended the POWER company and MATAH network for striving to lead in the manufacturing and distribution of Black products and goods.
"We’ve got good jobs, but we end up paying the money right back to the people who we’re working for. The White man’s system only works if there is a slave, because the ‘upper crust’ doesn’t do any work. They call it capitalism," he said.
According to Dr. Jawanza Kunjufu, author and publisher of "Black Economics: Solutions for Economic and Community Empowerment," the three ways to develop wealth are entrepreneurial ventures, real estate or the stock market.
A recent Chicago Sun Times report showed that Black investment in the market dropped from 74 percent last year to a current 61 percent, and that Blacks are looking into real estate as a more viable investment option.
The TMN report says that housing was Black America’s greatest expenditure in 2002, at over $131 billion.
Entrepreneurship, which Dr. Kunjufu said was championed for Black Americans by the Honorable Elijah Muhammad and Marcus Garvey, offers many challenges. He claims, however, that Black Americans could maintain their communities, despite a nine-year peak in unemployment, by supporting Black businesses.
"For every $1 billion that we spend with each other, we employ 50,000 more of our people," he said.
Asians and Jews circulate money better, he said, because they make decisions based on community, while Blacks make decisions based on price. But Blacks hesitate to support Black merchants because their prices may be higher or the same as the competitor, he added.
The challenge also lies, he said, in location. The 25 percent of Black households that earn a substantial income live in the suburbs where there are considerably fewer Black businesses, said Dr. Kunjufu.
"If your best Black minds do not live or work, spend, volunteer or invest in the Black community, can it be anything else but a ghetto?" he asked.
"We have a lot of income, but we don’t have a lot of wealth. And we don’t have wealth, because we simply transfer our wealth to others by spending most of that with businesses other than our own," said James Clingman, who is an adjunct professor at the University of Cincinnati and founder of the Greater Cincinnati African American Chamber of Commerce.
Mr. Clingman echoed others who say that control of manufacturing, production and distribution are key to economic empowerment. But he also contends that Blacks have psychological barriers.
"We’re also rich in intellectual capacity, and that’s what bothers me," he continued. "If most of us were not psychologically enslaved, we would be spending with one another, we would be building more businesses and supporting them, we would be pooling our capital and pooling our intellectual resources and doing more for our people, just like others are doing in this country.
"The only reason I see for us being the most educated and intellectual Black people on this earth, and having nearly $700 billion go through our hands and still be in the condition that we’re in, is that we’re still psychologically enslaved. There’s no way that this White man can do to us what he does and we just accept it. We have to stop accepting it. Turn inwards, look inwards to our own resources and do more for ourselves, regardless of what he does," he said.