Andrew Young and Urban Economics

Andrew Young, whom I remember as a smart and decent guy although I didn’t agree with him about everything, has been at the center of a profoundly saddening flap over remarks he made flacking for Wal-Mart. His observation is that Wal-Mart bettered the lives of people in his Atlanta neighborhood, which I infer to be mostly black, by out-competing small merchants who sold bad goods at low prices, instead offering good stuff cheap. What he got in trouble for was observing that these small local merchants had been successively Jewish, Korean, and “Arabs”; “almost everyone who has come into my community has moved in, made money and moved out and moved up,” he said. “That process is still continuing.”

Not surprisingly, the sky has fallen on him, and he had to quit his nice job fronting for Bentonville. But the tragedy in this story is not a Gibsonesque racist moment, but his complete failure, even when he realized he had to do some explaining, to think about the phenomenon he described. I think he got the facts right (though his Arabs are almost certainly some other middle eastern group). It’s not racist to observe that a sequence of immigrant ethnic group domination of various urban retail specialties is familiar in most American cities. In New York, the Jewish coffee shops were taken over by Greeks (with almost no change in the menu, but an innovation of “Greek paper cups” in blue and white with classical pictures on them) when the Jews’ kids went to college, and with the same generational transition denying the Greeks family to take over, they seem now to be mostly Vietnamese owned and operated (though the coffee cups, charmingly, remain). Who will sell bialys and bagels with coffee in Hercules cups to New Yorkers in twenty years; Dominicans? Uzbeks? Wait and see. Korean greengrocers, Italian fishmongers, Chinese laundries…the stereotypes reflect realities of one or another historical period.

What Young is bitter about, obviously, is the minimal salience of black entrepreneurs of any kind in black neighborhoods, and what he should have done is ask why this has been the case. Have white lenders financed Koreans to buy out the Jewish shopowners but denied such loans to blacks? Have black community leaders not made it clear to the kids that the business of America is business? Are the Koreans and “Arabs” getting a better education in the public schools, so they outcompete blacks who try to go up against them with fresh produce and low prices? Are blacks making more money in some other line of work; (the Irish in NY and Boston were little occupied with retailing in the early last century because they tended to be employed in the civil service, especially the police, and in construction)? Has someone been teaching his neighbors that anyone offering to sell you something is a hostile presence, so they don’t shop at black-owned stores and they can’t stay in business?

As it stands, his anger at the only people who are providing his neighborhood with a quart of milk within walking distance seems quite misplaced, especially considering the crushing hours required for a family to make a living with any kind of mom-and-pop store, extra-especially one in a low-income neighborhood. Young is right to draw attention to the apparent state of affairs, but a former mayor could be expected to do better in a public forum than to wallow in economic naivete and just wave a bloody shirt. What he did was deplorable because he was intellectually lazy (or politically cowardly), not because of the racist flavor everyone is detecting.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

22 thoughts on “Andrew Young and Urban Economics”

  1. The racism is classic pandering. I'm not sure I agree with you about the rest of the analysis (although it is good), but we're talking politics, and race is becoming (once again) an issue. Did he make a racist comment? I think so. Would it help his effort to get out the vote? Maybe. Was it a bad idea, now that all political races are national? Obviously.

  2. The scorched earth effect of Walmart and other large-scale retailers on Mom-and Pop stores means that this traditional avenue of advancement must have largely closed anyway. Are Hispanics opening corner stores?
    But you are right: it's an important and surely answerable question why African-Americans shun or are shut out of small-scale commerce. I think you see the same pattern in Britain, where (subject to correction) Afro-Caribbean Brits typically see the public sector as the avenue for advancement; but not in Africa, see the famous Nigerian market women. A long-run cultural effect of slavery and Jim Crow?

  3. Maybe a cultural effect of Tupac and Snoop Doggy Dogg? After all, African Americans aren't only acted upon, they also themselves act… It can't ALL be the fault of the "other", some of it has to be themselves.

  4. When Wal-Mart comes to town it doesn't matter if the residents are poor blacks who have a hard time earning enough for the rent, or third-generation storeowners who are white. The local merchants get driven out of business.
    And, of course, it's stupid to talk about the low prices when it means people make even lower wages.
    The white merchants in our small town who were ruined by Walmart certainly weren't listening to rap music.

  5. He's not angry with "the only people who are providing his neighborhood with a quart of milk"–he's angry with the non-Wal-Mart people.
    The difference appears to be that Wal-Mart offers higher quality for less money.
    I think the investment Wal-Mart and other major retailers are making in urban areas around the country is a good thing, offering consumers in those areas better access to high quality goods at lower prices. That'd be true whether the current small-store owners were black or Jewish or anything else.

  6. Why is this racist? Young's saying different ethnic groups have different interests, which is true, and the beginning of wisdom about politics. I suspect a lot of blacks agree with him, because they have bad memories of how they were treated by non-black store owners. They are treated better (as a general rule) by Wal-Mart, and the lower prices are nice too. Of course, those store owners have their own stories to tell, but are we really better off not knowing or talking about these conflicts? Should Amy Chua not have written her book?
    It seems a bit much for America to respond to every black leader who speaks honestly about ethnic relations by denouncing him as a "racist." It's a neat trick, but it's a bit much.

  7. A brief reply to serial catowner.
    It's not clear–I have seen no evidence–that Wal-Mart pays lower wages than the small stores that have been unable to compete with them. In many of these small stores, wages are at–or below–the minimum wage.

  8. I agree with Brett Bellmore, the commenter above. More of the fallout from this incident needs to be laid at the feet of Tupac Shakur. And perhaps Eazy-E, too. I know they didn't comment on the issue, and well…that they're dead, but any thinking person can see their hand in this grocery problem. As well as the blue coffee-cup aspect of the whole affair. Wake up, America.

  9. If Young was simply expressing concern over the lack of black-owned businesses he did not need to talk about "overcharging," and "ripping off," and "bad meat," etc.
    That is the language of bigotry, not aspiration.

  10. The ethnic shopkeepers stay in business because they exploit the hell out of themselves and their families. Next time you shop at a Korean greengrocers or dry cleaners, ask the nice young woman behind the counter how many hours she works. Chances are she works for her parents 12 hours a day 7 days a week, with a half-day on Sunday for church and a full Sunday off twice a month. But she's not earning less than minimum wage — in fact she doesn't get paid at all and lives at home, where she sleeps on a sofa bed in the living room. Eventually, by working themselves to the bone and living on rice, the family will able to buy a 4-unit apartment building. That's how a family moves from poverty to the middle class in one generation.
    African-Americans don't have the family structure and they don't have the culture of self-denial that some immigrant ethnic groups do. This doesn't mean they don't work hard, because they do, but it does mean that the willingness to exploit yourself and your family ruthlessly for years on end is not widespread.

  11. Weekend Question 1: How Did Wal-Mart Allow Itself to Get Embarrassed by Andrew Young?

    Okay, I’ve moved this up from when I planned to post it because:
    – A lot of people are covering it.
    – I want to glom some traffic from them.
    – Not necessarily in that order.
    ANSWER TO QUESTION: It’s part o…

  12. Fishbane's right. This is classic pandering. As someone who lives in a dense urban area, I know that corner stores usually have crappy groceries at high prices.
    It has nothing to do with the race of the owners, it's pure economics. These little stores pay relatively high overhead for minimal space. The bulk of their profit comes from prepackaged snack foods and alcohol.
    Nothing wrong with that, intrinsically. That's what convenience stores are for. Where are little corner stores supposed to put fresh meats, produce, and low fat dairy products? Which high quality distributors would supply 15 different quickie marts with eight fresh tomatoes per day when they could deliver the equivalent inventory to one huge supermarket?

  13. It's the corner store business model–not the ethnicity of the people who run it. When I lived in Boston, our corner store operators were predominantly Boston Irish.
    On my new street in Brooklyn, I count two Middle Eastern, one Korean, one Anglo-American, and three Hispanic-run convenience stores. They all suck, if you want to buy groceries.
    All the owners/managers work as hard as any hedge fund manager or doctor I know, and they've got their kids learning the family business, too. Running a corner store is a nasty business–you get all the hassles (FIC, annoying neighbors, etc, etc), all the risk of robbery (without the fancy electronic safes like at Seven-11), extortion from the local mob, and zero prestige. Don't kid yourself. Being a corner storekeeper is not considered a high-class job in any culture that I'm aware of. And, in my neighborhood gives all due respect to pipefitters, drywall hangers, the owners of greasyspoon diners, etc. Running the corner store is a thankless job.
    I have enormous admiration for the families that survive in the corner store business. It's a harder job than I could ever do.
    These folks aren't getting rich by any stretch of the imagination. They're just trying to get by like anyone else. The service they provide is convenience–at considerable risk to themselves. The Korean grocery story on my block got robbed and the clerk/co-owner was severely beaten. I think she was back at work in a sling the very next day. But it was weeks before her face was recognizable.

  14. New York is not the rest of the country. Many of the groups mentioned were evidently shut out of the coffee shop business elsewhere by not showing up or taking another path. Numbnuts!

  15. JR, you shouldn't knock a little self-exploitation. When the day gets stressful, sometimes it really helps you blow off some steam, you know? Or just when you're feeling happy.

  16. Corner stores, ethnicity, and economics

    Michael Young, a civil rights activist turned mouthpiece for Wal-Mart, who was forced to resign after making racist remarks about corner store owners: In the interview, published yesterday in The Los Angeles Sentinel, a weekly, Mr. Young said that Wal-…

  17. Furthermore, Nicholas, why would you expect black people to be more willing than their white counterparts to go into debt to start a corner store, given all the drawbacks you rightly attribute to the lifestyle? The whole point of starting your own business is to end up better off than you would be if you worked a job.
    Running a corner store may be the best option for people who know very little the options available to them in mainstream American society, have poor English skills, and have a small army of extended family from whom they can extract free labor.
    Otherwise, who needs the risk and the responsibility? If your goal is to improve your kids' lot in life, why not let them focus on their studies instead of conscripting them into your unpaid workforce? Or, for that matter, let them work for real minimum wage at the local Blockbuster or Seven-11, which at least have safes, daily cash pickups, and video surveillance?

  18. Corner stores, ethnicity, and economics

    Andrew Young, a civil rights activist turned mouthpiece for Wal-Mart, who was forced to resign after making racist remarks about corner store owners: In the interview, published yesterday in The Los Angeles Sentinel, a weekly, Mr. Young said that Wal-Mart

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