Important truths about Madison's economic disparities

“What important truth[s] do very few people agree with you on?”

Peter Thiel, cofounder of PayPal and author of the New York Times bestseller Zero to One, engineered this provocative interview question. The purpose of Thiel’s question was to test for boldness and “new thinking” in a candidate for hire. From Thiel’s perspective, it seemed pointless to entrust operations or program leadership to a person who is not an innovator.

Madison has an old problem of economically depressed black communities. Yet and still, we refuse to approach this problem with innovation. Why shouldn’t we approach assessing economic justice leadership the same way that Thiel approaches business leadership? Why shun new thinking in favor of old habits that have not already solved our problems?

Reading Zero to One inspired me to conceptualize applying Thiel’s model leadership test to economic development within Madison’s black communities. This thought experiment forced me to contemplate the false, yet popular beliefs that I imagine make even the most well-intentioned Madisonian become a part of the problem instead of the solution.

The results

Here is my short list of the top two myths — along with their corresponding truths — that are holding us back from making substantial forward progress toward black economic development in Madison.

1.) Most Madison-based companies believe that donating money to nonprofit corporations is the best way to leverage dollars toward poverty reduction in black communities. But the truth is that reallocating your company’s B2B dollars toward black-owned businesses is the smarter investment.

It’s your prerogative as to how (or whether) you donate dollars to charitable service organizations. However, if the intent of your donation is to economically uplift black families and entire communities, gainful employment and family-sustaining jobs must take precedent. Black businesses tend to employ black employees. If you want to significantly increase black employment, then you grow black businesses. This may not feel as warm and fuzzy as donating to kids’ charities, but it will have a broader economic impact.

Your company can help grow black businesses simply by engaging in open bidding and giving them an opportunity to compete for your procurement contracts. But you won’t do that, because you want those contracts and dollars to remain within your closed network of friends, family, and board members. It’s just easier to cut the check, shake some hands at the charity gala, and smile for cameras, right?

During a recent conversation with a representative from a local nonprofit, I mentioned that supplier diversity is the key to stimulating economic development within Madison’s black communities. The representative expressed complete agreement with my premise. But when I then asked the representative if the organization would commit to designing and implementing a supplier diversity program for their multimillion-dollar portfolio, my question was (very politely) ignored.



Perhaps Madison isn’t ready for this conversation. We’re stuck to old thinking that donating money to charities with black or black-friendly façades will somehow stimulate economic growth within black communities. Ironically, for a town that’s self-proclaimed “liberal,” this is nothing more than trickle-down economic theory; except, in the Madison model, multimillion dollar nonprofit corporations have replaced private sector businesses. Some of these nonprofits even sell services (e.g., diversity training) that constitute the core services of many local, black mom-and-pop operations, and cause the attrition of those private black businesses. The mom-and-pop consulting firms just can’t compete with the subsidized nonprofit offerings.

Therefore, to stimulate business and economic development within black communities, Madison must figure out a way to incubate new, competitive black businesses.

2.) Most of Madison’s so-called “leaders” think it’s okay to scapegoat Chicago for crime and black poverty rates. But the truth is that Madison could learn a lot from a bigger city approach to economic development within black communities.

The “blame Chicago” strategy is old thinking that keeps rearing its ugly head. I understand that Madison is a “pedigree” type of town, suggesting that the only worthwhile ideas come from those whose families have resided in Madison for at least two (but preferably five) generations. But this Chicago-blaming narrative has prejudiced Madison “leaders” against looking to Chicago for innovative examples of how to increase economic development opportunities for black youth and black communities.

Can you imagine the economic development potential, if there were business incubators and co-working spaces in a city’s most economically depressed neighborhoods? Well, my friend and classmate, Emile Cambry, did just that. His organization Blue1647 is making strides in closing racial (and gender) gaps in access to advanced technology, while turning around the image and functionality of some of Chicago’s historically maligned neighborhoods.

If we’re going to entrust our nonprofits to address economic disparities in Madison, then the nonprofit should come in the form of an institution that launches and incubates private, black-owned businesses that have growth potential. Most importantly, the incubator needs to be placed in the neighborhoods that are most under-resourced, not in the downtown area. This will be a much more effective use of charitable donations and city investments. That is, if we are genuinely looking to solve the problem, instead of containing it within predominately black neighborhoods.

Parting words

I have other truths about economic disparities in Madison, but I’m not sure if Madison is ready to hear them. First, you’ll have to demonstrate to me that our city and our businesses are committed to making headway in accepting the two truths that I have presented here, today.

In the meantime, can we at least explore innovative methods to address economic disparities? Can we at least allow ourselves to be inspired by bigger-city successes? If we want positive results, we’ll have to set aside our Madison chauvinism.

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