Meet John Walker, alias “Black Jack,” a licensed hawker in Victorian London. He makes a living distributing coal to Londoners in winter and selling sand to stables in summer. Like larger entrepreneurs, he plays the spread between wholesale and retail. “Wholesale, a sack [of coal] fetches me one and six; but it pays best to sell it to poor folks, my chief customers, in small lots at a penny and two pence a lot.” Sand he buys at 11 shillings a ton and lays down for 30 shillings a ton. But there’s overhead to consider—the donkey. Remarked one hawker, “I always feed my beast to make sure he gets his grub regular. I look after him too, as I would a brother. He’s worth all the trouble I can take about him.” Fortunately Black Jack’s beast was reliable—“my donkey’s took me home many a night when I had a drop o’ drink in me.”
Other hawkers dealt in strawberries purchased at Covent Garden. The business worked as follows: “Three partners, with a joint capital of 4 pounds [sterling] may invest in a lot that will turn out thirty-five or forty dozen ‘punnets’ [baskets]. These they will readily dispose of the same day at an average price of four pence a basket, or a trifle less.” Strawberries had to be handled with care. “Strawberries ain’t like marbles that stand chuckin’ about,” explained one dealer. “They are what you may call fancy goods. . . .You should never let them know you’ve got fingers, leastwise fingers like mine – all thumbs. They don’t like it. They must be worked without touching. . . . They won’t hardly bear to be looked at.”
Other laborers worked the Covent Garden flower trade. About two thousand men were employed bringing flowers to the hundreds of stalls in the market; another two thousand fanned out around London, carrying flowers to the various purchasers. These men were paid job-by-job, but an elite group had regular employment in the flower stalls; at 5:00 AM they brought the flowers from the wholesale market to their shops, where they arranged the inventory in a pleasing manner.
A Post-Capitalist Neighborhood
Because these men, though poor, were firmly connected to London’s commercial economy, they earned the income and self-respect that comes with having a real job. That’s not the case with all too many young black males in America’s inner city, which makes them susceptible to substance abuse and crime. According to the Urban Institute, in January 2010 the employment / population ratio (which takes account of both the unemployment rate and labor force participation rate) was just 39.9% for young black men, versus 57.4% for young white men and 52.8% for young Hispanic men. So 60% of young black men were not working. And that is a national figure—it is even higher in inner cities.
A NYT article by a Johns Hopkins historian argues that Baltimore’s poor are exploited by capitalists who control retailing and real estate. Unfortunately he’s wrong. Mainstream business interests have pretty much abandoned vast residential areas in Baltimore, Philadelphia, Detroit and other cities. There’s not a lot of profit in selling to households earnings $20,000 or $30,000 per year, especially when taxes are high and costs for security, insurance, pilferage, etc. are inflated by high crime. A tour, via Google maps, of the Baltimore neighborhood where the CVS store was looted and torched reveals only a smattering of national brands such as Subway and Burger King. Interestingly, there is a super-abundance of “carryout stores” mostly selling chicken and Chinese food—which suggests many residents don’t have the facilities or access to fresh produce that would allow them to cook at home. There are also plenty of check cashing stores, tax preparers, liquor stores, beauty salons and small stores selling clothes, used furniture, etc.
Such neighborhoods are a forlorn monument to liberalism. In the late 1960s the Civil Rights Movement and War on Poverty morphed into a campaign for income redistribution that was all too successful because both Democrats and Republicans were frightened by urban riots and took perpetual prosperity for granted. Transfer payments soared. Across the political spectrum capitalism was deemed un-cool and unnecessary; it was Richard Nixon who stupidly, and disastrously, imposed wage and price controls in 1971, setting the stage for double-digit inflation in 1973. (If you know you can’t raise prices while your own costs are rising, you don’t build new capacity.) During the dreary 1970s mainstream businesses decamped from increasingly over-taxed, crime-ridden cities, leaving the poor to the tender mercies of corrupt politicians and public employee unions.
A Capitalistic Anti-poverty Agenda
Liberals triumphed; the poor suffer. They are not literally “trapped” in “ghettos;” suburbanites commute into central cities, so obviously reverse commutes are possible and, indeed, are made by many. What is needed is economic reform that produces a prolonged period of strong GDP growth and robust labor demand, such as we had in the late 1990s. That was a period of welfare reform, a capital gains tax cut, soaring stock prices, and rising income inequality—but also major progress for poor black Americans. The percentage of blacks in poverty dropped from 33.4% in 1992 to 22.5% in 2000.
Today the indicated reforms are pretty obvious—corporate tax reform that repatriates $2 trillion in corporate cash stranded overseas, an “all of the above” energy policy, school choice for poor inner-city parents (not just rich liberals like the Obamas and Gores), and repealing anti-full-time-employment regulations such as Obamacare. Republican Presidential candidates should aggressively push a capitalist anti-poverty agenda for the inner city but eschew dumb gimmicks like “enterprise zones” and temporary tax holidays.
Copyright Thomas Doerflinger 2015. All Rights Reserved.