Wall St. and Business Wednesdays: Outsourcing, The Black Sharecropper of 1944, And The Crisis of The Black Economist

In Jeremy Rifkin’s excellent book, “The End Of Work” there is mention of how Black sharecroppers were displaced in extraordinary numbers by the introduction and invention in 1944 of the mechanical harvester. He writes that in only a fifteen year span the mechanical harvester grew from harvesting 6% of cotton in the South to 78%.

In the classic book, Message To The Blackman by the Honorable Elijah Muhammad two important statements appear. First, in a section called, “A Sound Economic Plan I” he writes, “The economic plight of the black people of this land has so long been neglected by so-called leaders that even our own people have forgotten it’s basic importance. Our economic position remains at the bottom of the ladder because of this ineffective leadership and because so many of our people ignore the basic rules of a healthy economic life. We fail to develop self-leadership in economics.” Then, following this further into this section appears, “It is very hard for an economist to plan a wise program and see his plans carried out, because the so-called American Negroes’ economics are controlled by the white man. The white man owns the country and the industry. He is manufacturer and producer of everything. Now, it is difficult to plan an economic program for a dependent people who, for all their lives, have tried to live like the white man.

I thought of the books, by Jeremy Rifkin and The Honorable Elijah Muhammad while reading an article which appeared in the March 4-5 edition of The Wall St. Journal entitled, “Outsourcing Work Looms Large in U.S. – India Ties”. Here are two portions of that article:

President Bush wrapped up his three-day trip to India, celebrating an improving relationship with the country. But the issue of outsourcing was never far from the surface.

At a stop in Hyderabad on Friday, Mr. Bush told an audience of young entrepreneurs that "we won't fear competition; we welcome competition." The flip side of building closer ties, he added, is "a 300-million-person market of middle-class citizens here in India." But in a sign of just how politically sensitive outsourcing remains, Mr. Bush didn't tour a single outsourcing company in Hyderabad, a booming center of high-tech outsourcing. Aides said Mr. Bush preferred instead to focus on India's future, including new types of business.

That was followed later by this excerpt:

...In an interview, several U.S. CEOs said that despite their belief that outsourcing creates wealth for all concerned, they still fear political backsliding. "The biggest risk is failure of political will and leadership," said William Harrison Jr., chairman and CEO of J.P. Morgan Chase & Co. Mr. Harrison was co-chairman of the CEO group along with Ratan Tata, chairman of Indian business conglomerate Tata Group.

But protectionist calls will likely intensify as India expands the types of work it offers. Beyond call centers and back-office data-input operations for foreign companies, India's engineers and other professionals are helping Detroit auto makers to design software for cars, conducting research for Wall Street firms and poring over legal contracts.

The rewards -- and risks -- of economic integration were clearly on display in Hyderabad. When Apple Computer Inc., for example, needed software developed for its iPod, it hired Silicon Valley's PortalPlayer Inc., which in turn did what many U.S. firms are doing: It outsourced the work to engineers in Hyderabad.

In PortalPlayer's Indian operations, young engineers work on cutting-edge multimedia technology that forms the guts of the iPod, as well as devices for other foreign customers. Earlier this year, PortalPlayer announced it was setting up another new facility in Hyderabad to expand its outsourcing business.

The evolution to so-called knowledge processing from routine "business processing" is fueling the outsourcing business, as foreign companies seek to reduce costs on high-end services. By 2010, knowledge-process outsourcing is expected to be a $17 billion business, compared with about $5 billion in 2003, according to Ashish Gupta, CEO of Evalueserve, a market-research firm in Gurgaon, India.

***

The above excerpts represent part of the context in which Black Americans find themselves. It is no longer sufficient for Blacks to view their economic plight in terms of the labor and capital of America, but also in terms of a global economy increasingly integrated and divided according to a specialization of labor. What the Wall Street Journal points to is the reality that it is not only manufacturing jobs that are leaving America but also service and information-based business. In essence, every form of work is being outsourced.

The Honorable Elijah Muhammad’s words are as true today as they are yesterday. The economics of black people are those of a dependent people. In fact, in a more detailed way, in a September 17, 1960 article, “What Must Be Done With The Negro?” the Honorable Elijah Muhammad says that Blacks were a people who give their brainpower, skills, talent, labor and wealth to another civilization and until Blacks stopped doing this – as well as increasing land ownership - they would not move beyond freed slave and dependent status toward independence and self sufficiency. The question can be posed today as it was decades ago - how much of the wealth, brainpower, skills, talent and labor of Black people is being deployed on behalf of Black communities and how much for communities and individuals other than themselves?

The reason why Blacks sharecroppers were ‘displaced’ in the 1940s and 50s by the mechanical harvester is the same reason they are displaced today by outsourcing – Blacks do not have (or do not follow) economic leadership that is far seeing and insightful enough to understand the relationship between labor and capital, its ownership, and how that is affected education and technology.

For a great many years, not understanding this, Black leaders have been fearful of technological change rather than advocating an engagement of it. Many Black leaders devoid of financial support and intellectual arguments have found comfort and support with some Whites who have styled themselves as progressives. To be sure unionists have done a wonderful job of protecting certain interests of Black America but purely viewing an economy from the perspective of labor and not wealth, talent, skills, and brainpower is a recipe for defeat. Black America needs more than one variable to consider, and one weapon to fight with in competing in the domestic and world economy.

For a great many years, not understanding this, Black leaders have been fearful of revolutionalizing the educational system of this country, and their communities, slow to admit or confront the fact that this country’s school system was designed, fashioned and influenced by intellectuals, and wealthy industrialists who desired that the masses be prepared to be workers who fit into a pre determined system – an economy controlled by elites who will not prepare people – especially the poor and non White – to manage economic shifts. That is why it is necessary to pay for advanced or higher learning. And now, even those institutions of higher learning and technical and vocational schools are barely able to prepare people to compete for jobs. And even when they are prepared, as laborers they are not able to compete in terms of wages. How can a medical transcriptionist who makes $14 an hour in the U.S. compete with one who earns $2 an hour in India? How can a computer programmer who makes $80,000 compete with one who earns $11,000? How can they compete not only at those rates with outsourcing occurring but also when the United States government offers special visas – like the H-1B visa – to attract skilled workers in certain professions, from India? And how can Black people ever compete for these jobs when America, cannot possibly make enough jobs for her own unemployed, with a Federal Reserve System that believes a certain level of employment must exist in order to prevent inflation?

In 1995 bilateral trade in goods with India was $9 billion. In 2005 it was $26.8 billion. Over 50% of Fortune 500 companies now outsource to India. Last year India made $5.2 billion from its outsourcing sector, while it only made $200 million in that sector in 2000. The U.S. accounted for more than 80% of that business. This trend is only going to continue.

Over a month ago, I started reading the excellent book, “As The Future Catches You,” by Juan Enriquez. His book advances the thesis that it is not the knowledge or even digital revolution that will dominate this century, it is the genetic revolution that will. He writes that genetics will be the dominant language of this century and genetic economics – genomics will dominate the production, consumption and distribution of wealth. Much of his thesis I agree with, other parts I don’t but when was the last time you heard a Black economist (Mr. Enriquez is not) thinking about the economic future and advocating planning for it in a comprehensive way?

One would think that Black economists would lead the way in this endeavor but most of them, think inside of a box They think and analyze as dependent economists, devising plans for dependent people, not ensuring that their brainpower, skills, talent, wealth and labor serves black people as much as it does others. Every year I read the work of the Black Enterprise Magazine Board Of Economists and read their analysis, which never deals with self-sufficiency. In fact I was almost embarrassed to read their view of what needed to be done after Hurricane Katrina, as a solution. It almost totally revolved around relying on government contracts to rebuild the Gulf Coast. I offered an alternative vision in a letter I wrote at BlackElectorate.com, to Black Enterprise magazine “E-Letter To Alan Hughes and Black Enterprise Re: Black America’s "Access To Capital" Problem”

The answer to the challenge of outsourcing and technological advancement and the crisis of Katrina is that the Black economist and business leader must come together and reason with one another over these realities and the need for a program to counter its effects. Their analysis and solutions can’t come solely from White economists – liberal, progressive, conservative or libertarian. It must come from a forum of lawful dialogue where the indigenous realities of Black America and the best interests of the masses take precedence. The solution must be a comprehensive one that does not rely on one variable – like capital or labor – and exclude others. It must be one that is international in nature, able to address economic integration and broad enough to understand how fiscal, trade and monetary policy affect economic development and growth. It must be one that does not shy away from the real and present economic legacy of slavery.

What is needed is a program and plan accepted or developed by people who no longer want a dependent status, giving their brainpower, skills, labor, talent, and wealth to others.

So this must be about courage as much as it is about insight and vision.

Otherwise, we are in no better shape today, in 2006, than the Black sharecropper of 1944, about to be blindsided by the mechanical harvester...

Cedric Muhammad

Wednesday, March 8, 2006

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