The Free Market

Home | Mises Library | Capitalism, Envy, and the Inner City

Capitalism, Envy, and the Inner City

  • The Free Market

Tags Free MarketsMonopoly and CompetitionValue and Exchange

02/01/1996Michael Levin

The Free Market 14, no. 2 (February 1996)

 

There aren't many such businesses left, but you can still find traces. Walk (or, more prudently, drive) along 125th St. in Harlem, and you will see Philip Blick's Hardware, Ida's Costumers, Lazarus Clothes, Dr. Goldin's Dental Offices, Benjamin Furs, and Dr. Irving Benjamin, Optometrist. Langsam and Breuer Upholsterers is gone, though, with Blumstein's Furniture just a faded sign, but one may yet count the numerous anonymous jewelers (except, perhaps, Rodriguez Fine Jewelry), and the ownership of a great many local buildings.

I refer, of course, to Jewish businesses in this well-known black area. Jews have been a conspicuous presence in black neighborhoods for more than a century, providing food, home furnishings, medical care, living accommodations, and financial services. Most of the Jews involved in these enterprises were first- or second-generation immigrants from Europe. In recent times, as Jews have veered toward more decorous occupations, these functions have been increasingly assumed by newer immigrants, often Korean or Arab.

Many blacks bitterly resent this Jewish (and lately Asian and Levantine) presence. The burning of Freddy's Fashion Mart in Harlem was foreshadowed by marches and protests. "Kill the Jew bastards," local blacks shouted. "Burn down the Jew store!" This resentment was given clear and full expression by Louis Farrakhan, the leader of the Nation of Islam, when, during a televised interview, he was asked, "What is the root of enmity between Jews and blacks?" His reply is worth quoting at length.

"When we use the term 'bloodsucker,' it doesn't just apply to some members of the Jewish community. That could apply to any human being who does nothing for another but lays on that human being to suck the value of its life without returning anything. That's what a bloodsucker does.

"Many of the Jews who owned the homes, the apartments in the black community, the stores in the black community, we considered them bloodsuckers because they took from our community and built their community but didn't offer anything back to our community. And when the Jews left, the Palestinian Arabs came, Koreans came, Vietnamese, other ethnic and racial groups came, and they took out of our community but they never put back into our community.

"And so this is a type of why we call them bloodsuckers of the poor. And that's not a bad description if you suck the life, the economic life out of a community, and given nothing back, then you are a bloodsucker."

There is more to learn from analyzing this tirade than reflexively shouting "anti-Semitism," as American Jews are prone to do. The misunderstanding of the market process behind Farrakhan's words, together with their overall view of human interaction, is a darker omen for race relations than his calculated Jew-baiting.

The fact is that, far from taking out of the black community and giving nothing back, the groups reviled by Farrakhan have contributed and continue to contribute enormously. They supply Harlem, the South Side of Chicago, and other slums with a stream of goods and services that blacks desire. Every time a black buys a suit from a Jewish clothier or vegetables from a Korean grocer, every time he gives a ring to a pawnbroker in exchange for ready money, he is made better off.

This is lesson #1 of economics. If the black did not value that suit more than the money he paid for it, he would not have made the purchase. Since he did make the purchase without anyone holding a gun to his head, he must have received something he valued more than the money he surrendered, and is, therefore, better off. Nothing could be plainer.

What irks the Farrakhans of the world is that the Jewish merchant profits from the exchange. Of course he does! He wouldn't have traded the suit for the money offered unless he valued the money more. Nor is there anything wrong in this. The merchant's profit in no way lessens the improvement in the black's position; merchant and customer both are better off.

Discounting the merchant's services because he benefits from delivering them is a fallacious, and insidious, form of envy, which counts a man as better off only if the gap separating him from everyone else narrows. The owner of an electronics store may grow ever richer than the hamburger cook who buys a television set from him, but the cook, who now has access to television sets and other commodities once undreamed-of, is better off than the Pharaohs.

Ah, but Farrakhan and like-minded blacks like to observe, Jews and Asians in Harlem usually charge more for goods and services than downtown merchants catering to whites. Koreans are also said to offer black neighborhoods inferior produce. My personal observations do not support the latter charge, but the former one is true.

However, prices are higher in Harlem because doing business in poor, black neighborhoods is more difficult and dangerous than serving the carriage trade. Security is a major worry: guards must be hired to prevent shoplifting. The threat of armed robbery is so pervasive that many merchants meet the public from behind bulletproof plexiglass shields. Self-styled community spokesmen who deplore the price charged in their communities might more usefully attack crime, to which those prices are a response.

In any case no one is being gouged. No one is taking advantage of blacks forced to buy from them. Blacks who find local stores insalubrious and expensive are free to shop in white neighborhoods. If they stay home, they must find the convenience of neighborhood shopping worth the cost.

Given the choice of operating a business in Harlem or in some better neighborhood, most people would instantly choose the latter. Many people with too little start-up capital to open a business anywhere but in a low-rent district would not open a business at all, but choose instead the security of working for someone else.

It is too much to call green grocers in Harlem "heroes," since their motive for being where they are is no more high-minded than earning a living. But they nonetheless endure difficulty and danger to sell blacks goods which, given the low rate of black business ownership, blacks would not sell to each other. Just how would slum residents get food and clothing if Jews, Asians, and other non-blacks collectively closed up shop one day?

The fact is that blacks in the U.S., although 12% of the population, own only 3% of its businesses. As most of these businesses are small, the available retail resources actually controlled by blacks is below 1%. Even these figures are misleadingly high, since many black business concerns are creatures of affirmative action, existing on government contracts that white firms are forbidden to bid for, and would collapse if forced to compete in the open market.

This lack of entrepreneurial drive suggests, among other things, ignorance of economics. I suspect that part of the black resentment against non-black businesses stems from this ignorance, in particular from a failure to comprehend that wealth is created by human effort.

Farrakhan and other black demagogues speak as if furniture, clothing, apartments, food, and toys fall from the sky. These goods are there for the asking (it is in effect believed), or would have been had Jews not somehow intercepted them, contrived to keep them from blacks, and then—the final outrage—made blacks pay to get them.

Does it need to be said that this picture is absurd? Most good must be made. And those goods that come ready-made or harvested must still be distributed by brokers and jobbers. Granted that the haberdasher does not manufacture the suit he sold. How will the typical Harlem resident find it if the haberdasher does not seek out items he thinks will sell, assemble them in one place, and advertise their availability? The rhetoric of black anti-Semitism seems to assume that, without the Jewish middleman, suits would simply show up by themselves on Lenox Avenue.

The idea that goods are just there may be what obscures the most natural solution to the "bloodsucker" problem, namely that dissatisfied blacks open their own businesses and cater to the black consumer preferences now being serviced by others.

The focus of animosity in Spike Lee's Do the Right Thing is Sal's, an Italian pizzeria in a black Brooklyn neighborhood. Well, why not urge blacks to open their own pizzerias (instead of destroying the Italian's, as is done in the movie)? But that course will seem impossible to anyone who thinks there are only so many pizzas in the world and the Italians already have them all.

It is literally not recognized that, however many pizzas there are out there, you can always make more, and, by making them well, beat the competition. Despite a certain amount of—angry—"self-help" rhetoric, many blacks seem to think that the way to get richer is for Jews and Koreans to vanish, somehow leaving their wealth behind to be seized.

Such quasi-magical conceptions conduce to other irrational beliefs. Once during a TV free-for-all about Korean "disrespect" for black shoppers, I asked my opponent why blacks didn't open their own stores. "Do you know," she replied heatedly, "that Korea lets people leave with $10,000?" I was so nonplused it took me a while to realize that she equated this policy with the Korean government giving emigrants money, no doubt to give them a head start on hopeful blacks.

Perhaps the most galling feature of this resentment is the unilateral demand that black sensitivities be catered to, without regard for others' points of view. Koreans are asked to be "warmer," although Koreans could with equal right ask blacks to be less excitable. A character in Do the Right Thing complains without irony that Sal has decorated his eatery with pictures of Italians rather than blacks. The market's advice: if you want your favorite decor, open your own place.

This idea of life as a one-way street too is sustained by the conviction that "bloodsuckers" conjure goods effortlessly. People who do not realize that a jeweler must first buy the jewelry he sells, as well as pay for the electricity he uses and the rental of his store, plus bear heavy burdens for the wages and benefits of his employees, will naturally view the $500 he gets for the ring as pure gravy. Add envy, and asking any price for the ring will seem exploitative.

More important than discrediting the "bloodsucker" charge, then, is understanding the illusions that sustain it. So long as entrepreneurs are considered parasites and the beneficiaries of their efforts seethe in indignation, the poverty of the envious classes can only deepen.

Author:

Michael Levin

Michael Levin teaches philosophy at City College of New York.

Cite This Article

Levin, Michael. "Capitalism, Envy, and the Inner City." The Free Market 14, no. 2 (February 1996).

Shield icon library