Just 20 years ago, the country had suffered a major stock market crash, meaning that high-flying investors leveraged to the hilt were dropping like flies. Michael Milken and Drexel Burnham Lambert were the AIG of the day and the federal government had to take over and divest the assets of thousands of financial institutions.
There is a lesson for the nation, but I’ll skip that for the moment.
I want to focus on the lesson for African-Americans. When the walls to high finance and mainstream distribution and retail outlets came tumbling down, a little-known lawyer named Reginald Lewis realized that corporate assets had become so cheap that practically anyone could buy them.
Lewis started with McCalls Patterns and then acquired the assets of Beatrice Foods. Within a couple of years, he was heading the first billion dollar African-American owned enterprise, with entities spread around the globe.
In the old paradigm, we used to be happy when an African-American achieved a milestone, hoping that it would open the doors for the rest of us. So we showered awards and accolades on Lewis without heeding the lesson of his book “Why Should White Guys Have All the Fun” and replicating his strategy.
In too many instances, the rapid growth of African-American businesses numerically has been through single-person enterprises with limited growth and employment possibilities. During our five previous State of Black Business reports, we’ve identified the lack of access to capital as a primary barrier to growth.
There were black-owned auto manufacturers at the same time as the founding of General Motors and black airplane inventors at the same time as the Wright Brothers. Capital kept them from succeeding over the succeeding years.
There is a concept in biology and physics of statis, or balance. Whenever a phenomenon goes too far one way, it is met with countervailing force.
Neoliberalism was part of the backlash to the civil rights movement and end of colonialism. It dismissed the issues of human empowerment in favor of a relentless march to short-term profit. The non-ideology meant than Chinese and Vietnamese Communists, former KGB agents and Wall Street hedge funds could all find common cause.
Lessons of the late 1980s were dismissed, creating a learning opportunity for we historians. Reggie Lewis figured things out in real time, however.
The disposition of assets at fire sale prices is going to make a lot of folks immensely wealthy, because 90 percent of the components of a Citigroup or an AIG or even General Motors are healthy businesses.
Freed from legacy costs and debt burden, thousands of going concerns will have bright growth prospects. Disruptive inventions can break through into markets without opposition from entrenched incumbents. Markets are transforming dramatically as the globalization model loses touch with consumer demand.
At such a time as this, African-American institutions and entrepreneurs can afford to thing really big. General Motors is going to shed several auto brands, where generations of black families have worked.
Should they just accept that or take the approach of some Saturn dealers and build the brand as a stand-alone company? The reality is that unless this new generation of Reginald Lewis’ leverages the massive inflow of capital to acquire major industrial assets, the employment prospects for black families in the Rust Belt will be bleak.
Groups like the organization of black auto suppliers have a vested interest in keeping their client base growing.
Companies like MacFarlane Partners in San Francisco went from practically nothing to owning major skyscrapers by acting on the inflection point of the economy.
As bad as things are, with black unemployment approaching 20 percent, there is still close to a trillion dollars in wealth floating around African-American communities, five times the net worth of sub-Saharan Africa.
However, our biggest asset is the improvisational approach that has blacks already facing economic conditions that most Americans couldn’t handle. We must think beyond survival.
Most of the Chicago-based businesses that laid a critical foundation of support for President Barack Obama got their start in that last period of economic upheaval. But we need more than one breakthroug in one arena, we need a lot of Reggie Lewises to step forward in 2009.