I’m a cop. If you don’t want to get hurt, don’t challenge me.

[YankeeFan]

This business probably took a ton of money to start:

Look at that first truck. It had to be super expensive.

 

[Dick Whitman]

I'm sorry, but the idea that we are going to solve black poverty in America by telling them really loudly to open brick-and-mortar businesses, in 2014, is preposterous.

Not everyone is going to open a business.

But, if some open businesses, that means jobs for others. It means more economic activity in the neighborhood, and more money that stays in the neighborhood.

Great. I'm sold. It's a hum-dinger of a plan to solve poverty among American blacks.

So how you gonna let 'em know about it?

 

[LongTimeListener]

YF, you can't really think mom-and-pop businesses are going to revitalize inner cities on a large scale. Please tell me you don't actually think that.

 

[Dick Whitman]

This business probably took a ton of money to start:

Look at that first truck. It had to be super expensive.

Another hum-dinger of a plan. That guy's story looks pretty typical to me.

What are you doing the rest of the day? Want to head down to Austin with me, interrupt a few dice games, and tell 'em about food trucks?

 

[YankeeFan]

You know YF (and others 'round here) ... capital ain't just money. I could give away every bit of tangible capital I have -- the IRA, the equity in my house, my collection of vintage Budweiser pint glasses -- and I'd still be pretty damn well-capitalized. I think the skepticism of DW et al. re: the entrepreneurship-to-solve-poverty narrative is justified, but not for the reasons that have been proffered to this point.

I didn't bring Dunkin' Donuts into the discussion, but I did suggest that one reason the immigrant community -- including the nonwhite immigrant community -- has been successful is because they didn't let racism get in their way. They largely created their own opportunities. They worked with and for each other. They pooled capital and resources. They patronized businesses owned by members of their community, keeping the money in their community.

They opened businesses, and they stressed education for their kids.

Maybe this formula won't solve the problems in poor, urban African-American communities (and rural white communities).

But, I'm not sure we should ignore it either. I think there must be some lessons that can be learned.

 

[MisterCreosote]

The 1-800-GOTJUNK guy scrounged up $780 for a pickup truck and a newspaper ad.

That's still about $775 more than the average impoverished person has on hand at any given time.

 

[cranberry]

This business probably took a ton of money to start:

Look at that first truck. It had to be super expensive.

Ah, the success story of a San Francisco surgeon's son. How heartwarming.

 

[LongTimeListener]

they didn't let racism get in their way.

By and large white people didn't let racism get in the immigrants' way either. At least not nearly to the degree they did with African-Americans. That's a part of it you're not getting.

Starting from zero is a lot better than starting from negative 1,000.

 

[YankeeFan]

YF, you can't really think mom-and-pop businesses are going to revitalize inner cities on a large scale. Please tell me you don't actually think that.

Why has it worked for the Indian, Pakistani, Korean, etc. communities, but can't work for the African-American community?

I'm especially puzzled, since many of the businesses these folks opened were in African-American, urban areas.

Now imagine these businesses were owned by African-Americans. Imagine they employed African-Americans from the neighborhood. Imagine the money from these businesses stayed in the community, since the owners and employees were members of it.

That wouldn't make a difference?

 

[Dick Whitman]

They patronized businesses owned by members of their community, keeping the money in their community.

You do realize that there is not money in these communities to begin with, right? They are impoverished. They aren't going to become less impoverished by passing money around to one another.

 

[MisterCreosote]

If you had a poverty-stricken neighborhood of, say, 100 adults, how much money do you think would they'd have if they "pooled their capital and resources?"

 

[Morris816]

I think some people are missing a larger point about the Dunkin' Donuts article I linked to: That the economic model currently set up does more to favor a chain of franchises than it does an individual who might want to open a local business.

Yeah, I'll take the blame for my misleading remarks, but with that said, I figured more people would read the article, particularly based on the last two paragraphs I quoted, which make it clear that our low interest rates do not favor somebody who wants to start up a business.

If you want to start a business, does it sound like a better idea to borrow a lot of money, or to save up as much money as you can so you don't have to borrow as much? If you believe it's the latter, then how can you effectively do that when interest rates are so low, you may be lucky to earn a dollar on $5,000 of savings.

Furthermore, if you read the Strong Towns article in question, you'd notice that his point is more than just about building doughnut shops, but the impact of local capitalism and wealth versus the national versions. Is it not possible that focusing things on the local level might do more to address poverty, when nearly all our efforts are done at the federal (read: national) level? No, that doesn't mean transfer more responsibilities for welfare to the states. It means focusing on communities to determine how they need to change their laws, planning, etc., to get them to evolve into an urban model that might reduce poverty and make it easier for small businesses to be started up.

Well, there is one exception: The federal reserve needs to stop setting interest rates that encouraging more borrowing than saving.

One last point: For all these people pointing out immigrants who came here and are running businesses successfully, the important questions to ask are about how much money they borrowed, versus how much they had in savings, and how long it's expected for them to pay off the money they borrowed... that is, assuming no other unanticipated expenditures come up that force them to borrow more.

Oh, and you can also ask how long ago they opened the business. Because the conditions under which one opened a business back in, say, 1955 are not like the conditions one opens a business today.