With that history in mind, she interrogates the question of whether or not black Americans can fix the problem on their own, for instance by turning to black-owned banks to spur lending and wealth creation. She determines that, while theoretically promising, the movement in support of black economic self-sufficiency will falter without the type of powerful assistance that helped create white wealth, including government policies promoting jobs, homeownership, education, and access to loans. “The theory behind developing a separate black economy had been that economic power would lead to political power, but perhaps they had it backward,” Baradaran writes.
Worse yet, she argues, is that the spirit and main tenets of black self-sufficiency, as imagined by black activists to include reparations, control over financial infrastructure, and a mandate to support and grow black businesses, were corrupted and repurposed by the Nixon administration and anti-integrationists during the late 1960s. Nixon and other Republicans, Baradaran writes, seized upon the idea of a separate black economy. They came up with a program—“black capitalism,” they called it—that they argued would promote black businesses and the creation of a thriving black economy, via policies such as affirmative-action requirements for private government contractors, bank-deposit transfers to black-owned institutions, and financial support for minority-owned businesses. But, in reality, Baradaran writes, these efforts were more a way to mollify black activists and assure white voters that racial tension and upheaval would soon end than they were an actual effort to erase racial economic inequality.
For example, in 1969, Nixon created the Office of Minority Business Enterprise (OMBE) in the Commerce Department, but didn’t allocate any funding to it. Instead, the office was to solicit funding from private sources and other government agencies in order to do the work of bolstering black businesses. The board that oversaw the OMBE was largely white, and, according to Baradaran’s account, indifferent to the outcome. The head of the black-capitalism program, Maurice Stans, derided an early proposal by one of the highest-ranking black members at OMBE, Abe Venable, to invest $8.6 billion in the creation of 400,000 minority businesses, and then promptly shut it down. In 1979, the OMBE was rebranded as the Minority Business Development Agency by the Carter administration, and still exists with the mission of advancing minority-owned business operations.
Many similar efforts amounted to very little considering the scale of the challenge. By 1971, a Small Business Administration program had doled out $66 million to minority firms, but that accounted for one-tenth of 1 percent of the government contracts granted that year. And still, the programs that set aside contracts for minority businesses were deemed controversial by white business owners and conservatives, making it difficult to allocate any more funding to bridge the gap. Similarly, the OMBE founded the Minority Bank Capital Program in 1969, with the goal of encouraging federal agencies to deposit $100 million of their total account holdings into minority banks. By 1971, only $35 million had been transferred.