Monday, October 11, 2010

Another Failed Attempt at an Honest Conversation About Race

I read that the U.S. Small Business Administration provides minorities with specially favorable loans, mentors, and sole-sourcing(!) in obtaining government contracts. Case studies were provided. Here's an example.

On my radio show, while I acknowledged that vestiges of racism may remain even 150 years after slavery, I wondered about the fairness of set-asides to the already strapped taxpayers who are forced to pay for it is well as to non-minority businesses who have to compete at such a disadvantage.

I received furious calls from minorities, mainly citing anecdotal evidence that racism is still alive and well in America. For example, one man said, "I was in sales and I had fine rapport with this customer on the phone and then he met me and he wouldn't make the deal." Could that not be because the customer, on seeing the product, didn't like it? Or because he, in the interim, found a better product? Or decided he really didn't need it or found a better use for the money? But the caller could only view it as evidence of America's being racist.

Another caller cited as evidence of racism that his boss told him, "I really like you so I'll be straight with you. A Black man can't get anywhere in advertising." Perhaps that boss was a racist. Or perhaps that boss tried to appear candid to prove he wasn't racist. But in fact: 6% of all managers and professionals in the advertising industry, many thousands of people, are Black. Yes that's an "underrepresentation" but does anyone decry as reverse-racist Blacks' overrepresentation," for example, in professional sports or in government jobs, which today are among the most attractive and employ far more people than does the advertising industry? But the caller insisted this was evidence that America is racist.

A caller cited as an example of racism that Blacks earn less per capita than all other groups. How much of that really is caused by racism? Could a more valid explanation be that fewer Blacks graduate from college? And very few complete majors in high-pay fields such as physics, engineering, and computer science? And might the racial income disparity have less to do with racism than the belief prevalent among many Black teens that studying hard is "acting white?" How about the gangsta rap culture? How about the high black high school dropout rate and crime rate?

A caller pointed out that Blacks are more often denied or charged a higher rate on bank loans. He angrily insisted that was a clear sign of racism. But as Paul Sperry, Fellow at Stanford University's Hoover Institution and author of the new book, The Great American Bank Robbery, wrote in a New York Post op-ed,

The evidence for discrimination boils down to the fact that black-owned firms are twice as likely to have a loan application rejected as white-owned firms.

But that overlooks the fact that black owners are more likely to have bad credit and default on loans than white owners, as Federal Reserve data show. In fact, black owners are three times as likely to have bankruptcies and judgments against them as white owners.

In other words, black owners are less likely to repay loans, and therefore pose a greater risk to commercial lenders. The "credit gap" is a function of rational business decisions, not racism.

Yet all the minority callers to my show insisted that set-aside giveaway programs for minorities are necessary because of we're still a racist society. It didn't end there. I returned home to find emails, all from African-Americans, all calling me "ignorant" and "racist." Their reasoning (not to mention their writing) was worse than the callers' and their threats more dispiriting than frightening. For example, Zaid wrote, "It’s safe for you start crying now, for in 50 years or less you will lose the reigns of White Male Over POWERING in this WORLD because of education and multiplication of People of Color. Then you’ll be treated like the today’s minorities- goes around, comes around."

America desperately needs an honest national conversation about race but the way our frightened-to-be-honest schools, colleges, and media portray the issues, I, at least, despite a number of serious attempts (here's one example), have been unable to do my part to start one.


Anonymous said...

I didn't hear your radio broadcast, but if you actually cited "150 years since slavery ended" as evidence of anything, no wonder people were upset, and rightfully so.

I've lived in cities on the East Coast that were marked by redlining of loans as recently as the 80s.

Read the comments section of sfgate after almost any reporting - crime or not - in Oakland, and you'll see plenty of overt racism.

Look at the patterns of who were offered the worst of the subprime loans in the recent mess. A number of people tried, and failed, to get the Fed under Greenspan to look into the adjustable rate loans generally, and at the fact that minority borrowers were actively steered into them at disproportionate rates even when they qualified for prime rate loans.

The Illinois attorney general has enough evidence on this for a suit, and the trend was recognized as early as 2001.

It is true that borrowers took out the loans, but the banks were anything but passive. A bank is selling money when it issues a loan, and it is in its interest to make that money as expensive as it can.

Unfortunately, loans and loan choices are extremely complex. Consumers do not go to school to understand them, as bankers do and mortgage bankers used to.

At the height of the bubble, the folks doing mortgage selling were operating out of boiler rooms and targeting older homeowners with unnecessary refinancing of almost-paid for loans. And yes, they were looking for less educated and elderly homeowners, and often those in predominantly minority zip codes. It was a scam much like the outrageously priced funeral insurance sold largely to minority consumers.

Not an example of the old turn-the-fire-hoses-on-them racism, but perhaps more damaging both to the direct victims and ultimately to society as a whole.

We have yet to see the real depths this recession will lead to in our large cities.

F.S. said...

Marty, you always close your show with "We find comfort among those who agree with us, growth among those who don't." And yet, when people disagree with you, you say that the conversation isn't "honest." Please help me reconcile these two things.

Marty Nemko said...

I love people who present new, intelligent perspectives, even when I disagree. But weak arguments made by people who call me racist if I disagree...well, that's something else.

Jonathan said...

If 6 percent of advertising professionals are black, then that ratio seems about right.

Blacks comprise 14 percent of the population. And of that amount, about 6-8 percent are working adult age. Maybe one in 10 of those has college, and maybe one in 100 of those has a degree in something related to advertising, or some sort of OJT qualification.

Heck, 6 percent sounds high. I wonder what is the percentage of blacks in the elite 1 percent of marketers?

I've heard that the South Koreans have a lock on the black hair care market, and that they lock out black competition with their import advantages. Could be something to it.

Marty Nemko said...

Jonathan, you have to compare apples with apples. For example, whether it's Blacks or others, the % of their race/ethnicity is compared with other adults. It's not like whites in the advertising industry are children--although some might claim they are!

Jonathan said...

I see your point, Marty.