Andrew Young, Cont.

A number of folks commented on Mike’s post about Andrew Young, essentially asking why African-Americans don’t run corner stores and coffee shops. I don’t know much about coffee shops, but let’s take three categories of small businesses that immigrants tend to concentrate on: corner shops, dry cleaners, and doughnut shops. What do all these have in common? First, they are very low margin enterprises. They are only profitable if you can drive hourly wages down very low. This is possible if you engage in what I call (and refer to in my co-edited book called Ethnicity, Social Mobility and Public Policy in the US and UK, available to your left) “self-exploitation.” These are enterprises that work mainly if you can make yourself and your family the labor pool, and make up for low average hourly wages with extremely long hours, both on the part of the owner and their family (whose labor is not directly compensated and not taxed). These type of enterprises don’t work for African-Americans for two reasons. First, their reserve wage is above the (very low) effective hourly wage that these enterprises provide. Second, given their family structure, most African-Americans don’t have recourse to uncompensated family labor. There’s also a third factor, which is access to capital–many of these enterprises are originally capitalized through rotating capital arrangements, which depend on the high level of social trust that comes from fairly tight-knit immigrant communities. A more speculative fourth factor is that these enterprises often work because consumption among the relevant immigrant groups is often highly suppressed–closer to the level of their countries of origin than the US norm.

One way of summing up the reason that African-Americans aren’t found in substantial numbers in these sorts of niches is that they are so thoroughly assimilated, in their expectations of return on labor, family structure, individualism, consumption patterns, etc. One doesn’t need to explain the phenomenon under examination by recourse to the peculiar character of African-Americans–in fact, it is the phenomenon of low-margin immigrant businesses that has more of a cultural grounding. This can be seen in the fact that very few second-generation immigrants are found in such jobs. They “work” in providing an economic bridge into the American market economy, but they are almost always transitional–the second generation moves into the mainstream economy, typically through education. This is true both in Britain and the United States.

This is a very compacted version of a highly complicated story. Those interested in the details would be well-advised to take a look at the book, available here.

Author: Steven M. Teles

Steven Teles is a Visiting Fellow at the Yale Center for the Study of American Politics. He is the author of Whose Welfare? AFDC and Elite Politics (University Press of Kansas), and co-editor of Ethnicity, Social Mobility and Public Policy (Cambridge). He is currently completing a book on the evolution of the conservative legal movement, co-editing a book on conservatism and American Political Development, and beginning a project on integrating political analysis into policy analysis. He has also written journal articles and book chapters on international free market think tanks, normative issues in policy analysis, pensions and affirmative action policy in Britain, US-China policy and federalism. He has taught at Brandeis, Boston University, Holy Cross, and Hamilton colleges, and been a research fellow at Harvard, Princeton and the University of London.

16 thoughts on “Andrew Young, Cont.”

  1. There's another factor at work, I think: a vicious circle. In communities without merchant traditions, merchants tend to be outsiders. Outsiders are resented. Thus shopkeeping becomes associated with exploitation. That in turn discourages entry into shopkeeping.

  2. Steven,
    That is a very interesting and useful explanation.
    For many years I worked construction jobs in my home state of Texas. It is a cliche that most of those jobs, including landscaping jobs, are filled by immigrants, both legal, and illegal, from south of the border. But you seem to run across much fewer of those, even small construction businesses, that are owned by those that do the work. Why? Is the initial capital outlay prohibitive compared to the cost of a corner shop? Are there some legal barriers at work? In other words what factor in this case is preventing the same dynamic you describe. Many of the same conditions seem to be present, although admittedly the work itself, often very physically demanding, might be a barrier to access to labor from the young and the extended family.
    There is a pretty big difference in self exploitation, and exploitation by a construction company, grower, or slaughterhouse. But the workers in each case are working under similar conditions. Obviously it makes sense that recent immigrants are more willing to make those kind of sacrifices, or are more likely to have to. But I wonder why certain immigrant groups have access to the means to turn that exploitation into self exploitation.

  3. Good post. Another line of argument buttressing yours…look atwho owned the corner stores 50-100 years ago.
    See http://www.uh.edu/engines/epi1512.htm
    When I first ran across the exhibition (and book) regarding the corner stores of Galveston, I had a sudden flood of memories of my early childhood and long visits with my Croatian immigrant grandparents who ran one of these stores. Another wave of immigrants, another time, same pattern.

  4. "They are only profitable if you can drive hourly wages down very low. This is possible if you engage in what I call … 'self-exploitation.'"
    To whom do the benefits of "self-exploitation" innure? Who unjustly deprives another of the benefits of his own work?
    Or is "self-exploitation" a variant on:
    "Under capitalism, man exploits man.
    Under communism, it's the other way around." ??

  5. This is a very compacted version of a highly complicated story. Those interested in the details would be well-advised to take a look at the book, available from all better internet booksellers, and the Cambridge University Press website.
    What book? I've searched for a reference to a book and/or an author and could not find it.
    I am interested in seeing it after reading what is a very good comment.

  6. Network effects play their part as well. I like the very local story of the Armenian hot dog stands of the East Bay (RIP "Original Kasper's", btw). When you buy a package of Casper's dogs at Costco, you partake in that tradition, all due to one Armenian who moved from Chicago to Oakland in 1930 and opened a stand.
    Also, anyone who knows who made the dogs for the OK stand on Telegraph, please post. I always found them superior to the non-"Original" dogs from both C- and K- chains.

  7. Another aspect of this is local adminstration of police powers by, obviously, the police, but also, the Health Department, Tax and Garbage Collectors, Building Inspectors, Fire Marshals, public utilities, and others.
    Here in Houston, these police powers are now exploited by "nationally-recognized bond-counsel". Houston has had these peculiar, now huge, law firms since Reconstruction in lieu of financial institutions or strong political parties.
    They provide for administration of government functions in accord with pervasive economic discrimination. This results in a professional and racial patronage chain with (a) a very few lawyers on top and (b) nearly all the "niggers" on bottom.
    Actually, the whole US Government is rather like this now.
    Those on the bottom are still on the bottom but are now patronizingly styled "African Americans" in public. Both parties in Washington agree that such linguistics are very, very progressive. The bond-lawyers agree. They are all very, very progressive … linguistically.
    The lawyer-ridden Democratic Party is the most voluble but has had the least influence on any of this. The bond-lawyers — Rudy GUILIANI, now — are still on top and the niggers are still on the bottom in Houston.
    The political participation rate is very low and the crime rate is very high in Houston. This is now a vicious circle as both parties are in on it, euphemizing economic/racial discrimination or, for that matter, Enron as "bi-partisan" — as, of course, they are but, so what? They are still … bad!
    I see no way to break this chain of economic and racial discrimination euphemized as bi-partisan good government unless and until patriotic military institutions replace professional concession-tending institutions of local government.

  8. ————————————————
    "They are only profitable if you can drive hourly wages down very low. This is possible if you engage in what I call … 'self-exploitation.'"
    To whom do the benefits of "self-exploitation" innure? Who unjustly deprives another of the benefits of his own work?
    Or is "self-exploitation" a variant on:
    "Under capitalism, man exploits man.
    Under communism, it's the other way around." ??
    ————————————————
    This was something of my own reaction. It seems like a hell of a way to skew the material to talk about "self-exploitation" as opposed to "self-control" or "aggressively deferred gratification".
    We really need to work on reducing the number of kids in the US who exploit themselves mercilessly by doing extra reading in summer, do their own research into subjects that interest them, and generally don't fully occupy their time with illegal drugs, sex, videogames and other pleasures of the moment.

  9. This is the first comment by stephen teles that I didn't disagree with. I think his analysis is spot on. In anthropology and sociology we see this phenomenon in peasant societies where it is called "the self exploitation of the peasant family" as peasant families monopolize and exploit the labor of younger and in married family members for profit for the whole family. The exploitation part becomes clear when there is a distinct difference in the ownership stakes allotted to different kinds of family members–children, women, men so that the labor of all is required for the family business, and the consumption of all (or almost all) is controlled/deferred/limited but the ownership is vested in only a few members (traditionally older men).
    Its hard to run a capitalized and capitalistic business for long on these grounds when indiividual family members can educate themselves up and out and achieve control over both their own labor and their own living circumstances when family labor conditions become too oppressive.
    Like many others my own family certainly recapitulated this history. My great grandfather started as a back peddler and went door to door selling notions, eventually opened one and then more dry goods stores which he ran with the help of his wife and sons. The sons didn't want or need to work in the stores and the depression destroyed them and returned my great grandfather to peddling.
    there's not much new under the sun.
    aimai

  10. Another aspect of this is local adminstration of police powers by, obviously, the police, but also, the Health Department, Tax and Garbage Collectors, Building Inspectors, Fire Marshals, public utilities, and others.
    Here in Houston, these police powers are now exploited by “nationally-recognized bond-counsel”. Houston has had these peculiar, now huge, law firms since Reconstruction in lieu of financial institutions or strong political parties.
    They provide for administration of government functions in accord with pervasive economic discrimination. This results in a professional and racial patronage chain with (a) a very few lawyers on top and (b) nearly all the “niggers” on bottom.
    Actually, the whole US Government is rather like this now.
    Those on the bottom are still on the bottom but are now patronizingly styled “African Americans” in public. Both parties in Washington agree that such linguistics are very, very progressive. The bond-lawyers agree. They are all very, very progressive … linguistically.
    The lawyer-ridden Democratic Party is the most voluble but has had the least influence on any of this. The bond-lawyers — Rudy GUILIANI, now — are still on top and the niggers are still on the bottom in Houston.
    The political participation rate is very low and the crime rate is very high in Houston. This is now a vicious circle as both parties are in on it, euphemizing economic/racial discrimination or, for that matter, Enron as “bi-partisan” — as, of course, they are but, so what? They are still … bad!
    I see no way to break this chain of economic and racial discrimination euphemized as bi-partisan good government unless and until patriotic military institutions replace professional concession-tending institutions of local government.

  11. Isn't it pretty well-documented that blacks have a harder time getting loans than other ethnicities do? Send two guys with identical financials into the loan officer's office, & the black guy is more likely to get rejected.
    Wouldn't that apply to black entrepreneurs as well?
    Whereas immigrants, regardless of whether they make a better impression on the loan officer, are likely to have a network "back home" or in this country helping them get their start-up capital.

  12. anderson is right, but of course blacks are also immigrants–it would be instructive to look at the rates of entrepreneurship/small business building among first generation african and caribbean blacks vs indigenous african americans and also explore the networking and financial status of these groups.
    I can't find the reference but I did read an article many years ago about the difficulty *all* small shopkeepers have in staving off demands for credit/loans from impoverished friends and relatives. This made it difficult for african american shopkeepers to make a go of it in their own neighborhoods–while racism made it impossible for them to set up shop in non-black neighborhoods–. I'd like to see some work done on whether it is in fact easier to maintain a businesslike and harshly distanced relationship from your customers precisely when there is a difference in ethnicity–thus enabling the shop keeper not to be devasted by the fallout from forced credit and loans to customers who don't pay back.
    aimai

  13. 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

  14. Waitaminute – I seem to remember that in the 1960s, the Jews who owned those corner stores mostly sold them to *blacks*, for a variety of reasons, and it wasn't until the late 70s that most of them got sold on to Mideasterners and later, Koreans.

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