Month: October 2018

1 Comment Posted on by jeff_kirwin Uncategorized Image

The Onion King

To be crowned the Onion King takes a significant action, and Vince Casuga did just that. NPR’s “Planet Money” podcast tells the story of how Casuga was crowned the Onion King. Onions are not usually the path people take to wealth, but Vince Casuga proves that it is possible. One man with the help of another held the entire United States onion market hostage. Later he would be the cause the banishment of the only crop from the futures market. Although the king was rewarded with a handsome profit, his reputation among other farmers is still known today.

(Image of an onion farm owned by Dixondale Farms)

Vince Casuga began his crusade on the United States onion market in the mid 1950’s. Through his crusade he exemplified the big idea of capitalism. Specifically, he provided an example of relentless drive for control. Casuga portrays relentless drive for control by controlling the entire onion market, so he could set any price he wanted. This was accomplished by buying ninety-eight percent of the onions in the United States. He hid the millions of onions in warehouses he built throughout the nation. The Onion King then bought up nearly every futures contract that farmers had with buyers. By doing so he owned almost all onions already harvested, and almost every onion still in the ground. When the eventual shortage of onions came, Casuga was the only place a potential buyer could purchase onions from. He brought most of the major buyers together and told them they could pay the price he set or he would flood the market and destroy the price of onions. His control of the market gave him a nine million dollar profit.

Business, State, and Society is also portrayed in the story of the Onion King. This came after he sought control of the market a second time. First, he bought a large amount of futures in the onion market. The futures he bought bet that the price per bag of onion would fall dramatically. The issue is that he was not really gambling. He owned such a large portion of onions that he could create a price drop large enough to cash out on his bets. During a purchasing period of onions, Casuga trucked and trained in all of his onions. This flood of millions of onions into the market dropped the price of a bag of onions to ten cents. The price of the bag itself was twenty cents. He then obtained a payout of eight and a half million dollars. Other farmers went bankrupt and went to their congressmen. After some time and several congressional meetings, Eisenhower singed the Onion Futures Act of 1958. This act prevented the sale of onion futures which prevented from someone being able to do what Casuga did.

This state action caused an unacknowledged consequence. Futures were a safety net for onion farmers. Farmers could enter into a contract before the harvest that guaranteed the price they would receive.  After the act, farmers were no longer protected from the sudden rise of and fall of onion prices. Now they must rely on the market each harvest to be at a price high enough to get them to the next year.

 

1 Comment Posted on by matt_pouchain1 business, state, and society, unacknowledged assumptions

Oppression in the Job Market and the Black Power Movement.

In chapter 7 of MJ, Kenneth Lipartito alleges the existence of  “whites only” policies and remarks that the overlaying majority of the woman hired where white single females. Consequently to the ongoing black employee oppression and discrimination, numerous movements pro-black culture were gaining popularity. One of the major movement in the late 19th century was the Black Power Movement. The popular TV shows called “Independent Lens” featured by PBS, the documentary debuts the arrival of Swedish filmmakers to explore the Black Power Movement. As the movement was classified as a “violent threat” by the U.S media, a lot of intangible data was acquired by the filmmakers. Some may claim that the movement was basically a necessarily a black narcissistic movement, as it raised the pride of negros.  However, the effect of the movements goes much further than raising pride, as it built a column/foundation to the modern movement “black lives matter”.  Just as the police and their actions were the prime focus of Black Lives Matter, the law enforcement was targeted during the Black Power movement. The main difference between the two movements was that the Black power movement was an unadulterated black movement, meaning that whites did not chant it.

In the 1970ʻs the Black Power movement began to spread throughout America. The movement was a political and social movement that incentivized racial pride and equality by empowering Black people to reclaim a sense of culture that was taken from them over generations of enslavement. To expand my knowledge in the subject, I consulted the data presented by the government’s national archives. Due to the aggressivity of the movement,  Federal agencies and collections have records that are directly related to the Black Power movement, including information on various organizations, such as the Nation of Islam (NOI), Deacons for Defense and Justice, and the Black Panther Party for Self-Defense (BPP). The documentation also includes records on individuals, such as Malcolm X, Fred Hampton, Stokely Carmichael, and Shirley Chisholm. In fact, the first articulation of “Black Power” was credited to the Student Nonviolent Coordinating Committee leader, Stokely Carmichael, who represented black activists.

The most evident of the “Big ideas” for this course that within the movement is Business, State and Society. The movement encouraged African Americans to return to their traditional, African roots. As result, clothing with traditional African patterns became more common, along with Afros and African dance groups. However, the movement brought more than new fashion statements.  Black activists encouraged their community to reclaim their African heritage and build a new African American culture through names. During this time America began seeing an increase in what they called, “black names”. While some of these names were linked to traditional African names, many of them were also invented by the African American community. Until this shift, most African American and white children shared similar, if not identical, names.  The diverse naming of African American children compared to white children began to create an even bigger divide between the two peoples. It was now easier for citizens to put their personal biases on others just by seeing a name, for names had begun to indicate culture and ethnicity as well as personal identity. But not all African Americans followed this trend. While some African American parents picked traditional African names, other continued to use classically “white names”.  Using data from California birth-certificates dating back to the 1960ʻs, we can begin to see what kind of African American parents would choose to name their child a “black name” instead of a “white name”. What Roland G. Fryer Jr., a young black economist, found was that young, undereducated, low-income black women with a similarly traditional “black name” were significantly more likely to give their child a “black name”. These women commonly lived in black communities, making the choice of giving their child a “black name” a lot easier, for it signaled their solidarity with the community and agreement with the black power movement.  This decision was also majorly influenced by outward societal pressures felt by these women, many of which surrounded the idea that a black woman giving their child a “white name” was seen as the said women trying to “act white”. This label could lead to her and her child being heavily judged by their community, and possibly becoming outcasts.

The criticisms of the movement also align with another “Big idea” for this course. The criticism reveals “unintended consequences ”. Most of the critics on the movement were focused on aggravated gender disequality generated by the movement. While some disagree, most claim that the movement the implemented a concept of black masculinity, which was extremely assertive and selective. Subsequently, it also used sexist language which excluded women. It is asserted that the Black Power movement was a call to black men and completely ignored the role of women, who thought that the movement was misleading.  Curiously, some claim that the “black gender issue” mirrored the racial issue- woman says that they were oppressed by black men just as black men were oppressed by Whites. Interesting controversy right? 

One of the main assumptions out there is that there exists systematic oppression such as white privilege and male privilege. However, the constitution does not support any form of oppression, thus there are no premises for constitutional or systematic oppression. So what are the premises of oppression? How should society deal with discrimination and oppression?

Link to the TV show: https://www.pbs.org/video/independent-lens-looking-back-at-the-black-power-movement/

1 Comment Posted on by thomas_klinger Uncategorized

Big Government Cheese

In the Planet Money podcast Big Government Cheese I was reminded of stories my dad told me of eating government cheese growing up poor in Georgia. So it was interesting to listen to an in depth program examining how this program came to exist. Like many bad things this idea came from the desire to support American farmers financially. Jimmy Carter was interested in supporting American farmers and as a campaign pledge wanted to raise the price of milk as a way of giving farmers more money. To increase the price of a product in such a way the government had two options lowering the supply or increasing the demand. Canada is an example of a country that maintains the price of milk by lowering the supply, after a certain quota of milk is produced the farmers are ordered to stop producing. America chooses not to take this route and instead tries to increase the demand. The easiest way for the government to do this is by buying the product and storing it, it had done this before with corn and other grains. However the properties of milk make this impossible milk spoils quickly and is harder to store. It is here that cheese comes into the picture, USDA looks at what dairy products can be storeable one of the best of these dairy products for storage was cheddar cheese. So the government decided to buy as much cheese as the cheese producers would sell them at a fixed price. By buying as much cheese at an artificially high price as the cheese makers could make, the cheese makers would buy more milk thus increasing the price of milk and accomplishing the goal of the Carter administration. This artificial demand would raise the price of milk but the government would have to keep buying all the cheese the makers were willing to sell to keep milk prices at the level they wanted. Buying this large amount of cheese created a storage problem, eventually the government had to resort to renting out large cave spaces in Kansas to store the cheese. It was this silly situation that brought attention to the massive amounts of money that the government was spending on buying cheese only for it to have to be stored and rot. So the government started looking for ways to get rid of the cheese without harming the very market they wanted to support. If the government sold the cheese on the open market there would have been commercial displacement destroying the cheese market and thus milk market with a flood of cheap cheese. Instead the government decides to give the cheese away to consumers who would not have otherwise bought the cheese. The cheese was processed and made into 2 and 5 pound bricks and given away as food aid to the poor of America. It was this spectacle of millions of pounds of expensive cheese being processed and given away that created a popular cultural icon and an example of bad government spending. The government eventually tired of being involved in this business and eventually extracted itself from buying cheese slowly by increasing milk ads and giving farmers direct subsidies instead.

There are a lot of “Big Ideas” to discuss in this podcast but the obvious one is one which the podcast points out itself, the problem of unintended consequence. The goal of the government was to support American farmers by price controls but this led to the government buying billions of dollars of cheese every year that they had to inspect, store and eventually give away. Another would be how business, state and society interact the various pressures and values that guided the way government cheese came about, For instance unlike Canada we did not impose a production limit on milk largely because that seemed un-American to have limits on production. The way the farmers as an interest group gets the government to engage in the market also reminded me of the case of Nixon subsidizing corn production and increasing the use of high fructose corn syrup as a way to lower the cost of food to the average household for political gain. I don’t think these unintended consequences will ever go away and we live with some greater and more unknown than government cheese.

1 Comment Posted on by luke_jones1 Uncategorized

Cryptocurrency: Fad or Future?

Luke Jones

 

See the source image

 

When thinking about what modern business market I knew the least about, cryptocurrency came to mind. I’m not much of a tech-minded person, so it had always seemed above my head. Specifically, the incident of the Bitcoin market crash of 2017 came to mind. In my research on the topic, I came across Nick Paumgarten’s longform article “The Prophets of Cryptocurrency Survey the Boom and Bust,” from The New Yorker. In it, Paumgarten goes deep into the story of Vitalik Buterin, founder of Bitcoin’s less known but arguably fiercest competitor Ethereum. The article covers both the founding story of Ethereum itself, the history of the American cryptocurrency market as a whole (with a focus on Bitcoin, Ethereum, Litecoin, and Ripple, the top competitors in the market), and the modern problems that have arisen with the growth, explosion, and crash of cryptocurrency that has given it such a bad reputation in the last couple of years.

One of the biggest areas covered by this article was Big Idea 4, unintended consequences and unacknowledged assumptions. There were multiple examples of this idea shown throughout the article, but two specifically stood out as the most impactful. 

The first example of this is with the unforeseen negative impact that e-currency would have on the environment through its massive demand for energy for the algorithmic processing process known as “mining”. Mining is when a computer, in competition with dozens, hundreds, or potentially even thousands of other machines, tries to solve a complex mathematical algorithm. Once it does this, the algorithm gets inputted into the cryptocurrency monetary system, creating one bitcoin, worth about 6400 USD. This incredible amount of processing power needed for large scale mining consequently uses a lot of electrical energy, which in turn means more power and pollution is created in power plants.  

“This year, it is said, the Bitcoin network will use as much energy as the nation of Austria, and produce as much carbon dioxide as a million transatlantic flights. Mining rigs—computers designed specifically to do this work—are thirsty machines. Mining farms tend to sprout up where juice is cheap (typically, in proximity to hydropower projects with excess capacity to unload) and where temperatures are low (so you don’t have to burn even more electricity to keep the rigs cool). There are open-air warehouses in remote corners of sub-Arctic Canada, Russia, and China, with machines whirring away on the tundra, creating magic money, while the permafrost melts.”

The pseudonymous original creator/creators of Bitcoin, Satoshi Nakamoto, was only concerned in making as secure of an online bank as possible, and once Nakamoto decided to launch this peer-to-peer payment system in 2008, it was then out of his/her/their hands. As part public domain on the world wide web (and not any private individual, company, or government), there was no oversight as to how the market forces of the cryptocurrency were to be reined in in cases of a greater public need, such as in this instance with the potential increase in pollution and global warming. Mining conglomerates, private groups that own their own massive collections of mining computers, have been slowly converting their privately-owned machines into public goods, relinquishing even more power. 

One of the other unintended consequences of cryptocurrency was the unanticipated conflict in the governance of cryptocurrency blockchains. Blockchains are the systems that record and protect any transactions made in a cryptocurrency banking system. They are also heavily controlled by the managers of the systems themselves. For the money to be protected, there are rules that must be put in place by the managers (in a public system) or owners (in a private system) to keep everyone else in check. The biggest problem that must be overcome is that for the rules to be followed well, the checks and balances between the people on the system must be simple but very thorough, a paradox if there ever was one.  

A good way to understand the extremely complicated and confusing relationship between people using cryptocurrency and the system rules is to compare it to a person following the law in the real world. The best way the American government protects its people is through its creation and enforcement of laws. There are many simple laws that everyday people can understand (such as don’t murder, don’t steal, pay taxes, etc.). However, in order to prevent problems in complex areas such as big business and healthcare, specialized lawyers are the ones who learn the specific law instead of your average citizen. They are the ones who help coach people how to follow the law, and they are the ones that prosecute people who break it as well.  

The same holds true for rules on an e-currency platform. There must be a balance between simple rules that an average miner or currency trader can follow (such as how to properly mine in a legal way on other people’s computers) and the complicated rules that only lawyers specializing in the cryptocurrency field can understand completely in order to properly advise the systems managers (such as how to handle system controls in a way that doesn’t steal miner’s money). Where cryptocurrency was created to be both user- and manager-friendly, people trying to negatively control the system have ruined it for everyone. Cryptocurrency, an online banking platform first praised for its simplicity and independence from the many human errors and corruption found in real world banking, now needs the human interaction and management it once fought against. Not even the “magical fake money” of cryptocurrency can remain untainted by greed in America forever.

1 Comment Posted on by katie_shore1 20th century

Let There Be Light!

Katie Shore

Light bulb

(Image of a Light Bulb from BBC News)

Since the beginning of time, light has been a human necessity. While natural light is nice and all, it wasn’t always available when humans needed it. When the sun went down, the day was over, but new and efficient forms of light fixed this problem. Now, I can study in my well-lit room as late into the night as I want rather than sleeping as I should.

It took a long time to develop the accessible electricity that I use today for my late night studying. NPR’s “Planet Money” podcast titled “The History of Light” goes as far back as four thousand years ago to the time of the Babylonians to analyze the difficulties of creating and using light. Bill Nordhaus, an Economics professor at Yale, conducted his own experiments to emulate how the ancient Babylonians produced light. He determined that to generate a mere ten minutes of light during this time, a person would need to spend an entire day’s worth of wages.

One would expect that as the years went on, innovations would allow people to spend less money on light and get more of it. On the contrary, Nordhaus explains that improvements generally didn’t do much: “From Babylonian times to around 1800, there were – even though there were improvements as best we can tell, they were very modest.”

Creating light was a process involving a great deal of complexity. For example, some people made candles out of beef fat. This process involved raising, feeding, and then killing a cow to extract and melt its fat. Wicks then needed to be dipped in the fat and dried. Only after lots of work would you have some candles that would produce a minimal amount of light. One of the narrators of the podcast tried this technique and spent several hours making candles, which are pictured below.

(Images of Beef Fat Candles from Jacob Goldstein of NPR)

If you didn’t want to make candles out of beef fat, then you had a few other options. Some killed whales for their fat and burned whale oil to generate light. This tactic created about an hour of light for a day’s worth of wages. Likewise, the Native Americans in the Pacific Northwest would catch salmon and turn them into candles. The petrel, an oily seabird, was turned into a candle by putting a wick down its throat and lighting it. Still, there had to be an easier way to get light that didn’t involve killing animals…

Finally, in the 1800s, scientists began experimenting to try to produce better, more efficient forms of light. In 1850, a man named Abraham Gesner developed kerosene, which provided more light and was cheaper than other light sources at the time. It also didn’t require any animals to be killed and produced five hours of light for a day’s worth of wages.

The most significant breakthrough was Edison’s invention of the light bulb and cheaper electricity. Banker J.P. Morgan funded Edison, which allowed him to build a power plant that would illuminate his lightbulbs. In 1882, the plant was completed in Lower Manhattan, and it was able to power part of the area. Edison’s power plant involved a great deal of complexity as well. He had patents to protect his innovative ideas, and investors gave him a lot of money to support his efforts. Ultimately, Edison created a safe, inexpensive, and efficient source of light that was revolutionary at the time.

Now, one day’s worth of wages can purchase 20,000 hours of light. We have sure come a long way from the ten minutes of light a day’s wages could buy in the Babylonian times.

The creation of a new source of light created some unintended consequences. Edison’s power plant burnt a great deal of coal, which caused a lot of pollution. Additionally, this new technology provided humans with opportunities far beyond just light, as the podcast’s host notes: “This one little story, it explains why we are where we are today, why billions of people don’t have to worry about starving today, why we aren’t all subsistence farmers, why we can afford to have artists and massage therapists and plumbers and, yes, radio reporters doing stories about the history of light.” Who would have thought at the time that more accessible lighting solutions would have such a significant impact on humanity? Now, almost everything that we do somehow involves electricity or a source of light.

Today, we have lots and lots of light, and the quest for even better light sources continues. Companies such as John Edmond’s Cree continue to create better, more efficient lighting solutions such as LED light bulbs. From street lights to desk lamps to car headlights, we live in a well-lit world.

The future is bright for humanity, and it’s because of light.

 

 

1 Comment Posted on by haley_beard2 business, state, and society, Uncategorized

How Sears Challenged the Social Structure Jim Crow Enforced

When thinking about Jim Crow laws and how they fought to keep racial segregation in the south, I did not take into consideration that other groups besides the African Americans would be fighting against them. My mind automatically thought of the African Americans that would rally against the law and not to other white people, or even businesses, who would fight. An article posted a couple weeks ago by The Washington Post titled “Sears’s ‘radical’ past: How mail-order catalogues subverted the racial hierarchy of Jim Crow” opened my mind to see that other people fought against those unjust laws as well.

Within this article, I learned about how the catalogues Sears released, primarily the 322 page one released in 1894, was seen as a radical act during this era of Jim Crow. The Rural Free Delivery Act allowed Sears to reach communities in the south and be able to send them catalogues. This gave the opportunity for people who weren’t as literate to fill out order forms that would be sent through and processed no matter what the format looked like. These forms allowed anonymity for the customers, especially African Americans, by not having to go in to face racist treatment from storeowners and instead, being allowed to purchase however many goods they want no matter the color of their skin. This way, the playing field was leveled for all races by ensuring they would be treated the same way. If an African American were to go into a retail, grocery, or any type of store, they would have to wait until all the white customers purchased the goods they wanted first and only be given the leftovers/lower quality goods. However, with the catalogues Sears provided, African Americans were able to buy the same goods white people had.

       

(image from age fotostock and Marketplace)

One of the part owners of Sears, Julius Rosenwald, became a philanthropist for black communities. He donated millions of dollars to build schools for African Americans to attend and earn a fair shot at learning, since the new schools would omit racial discrimination when teaching. Rosenwald wanted African Americans to have the same opportunities at a better life that white people have. Rosenwald helped fund financial support, as well as helped fund YMCA’s and YWCA’s for African Americans. Sears was able to give African Americans something white people took away from them, their dignity.

The Sears catalogue, in a way, was a beacon of hope for African Americans during the time of Jim Crow laws to show that not everyone wanted to keep the racial segregation that the south imposed. The most prominent “Big Idea” from our course within the Sears article is business, state, and society. We are able to see how a business, Sears, can capitalize on the south’s Jim Crow laws by passing their own, the Rural Free Delivery Act, that allows their business to reach the African Americans the south is trying to suppress. Sears is undermining the state in attempt to give the African Americans a society in which they can be seen as equals, even if it is in something as small as ordering clothes or supplies from a catalogue that allows everyone to be treated equally. Also, Julius Rosenwald is defying the norms of how white people are supposed to act toward African Americans by trying his hardest to give them the society they deserve, one of equality. Businesses, such as Sears, have the ability to go head to head against the state or society and fight for the change they believe in. It only takes the defiance of one, whether it be one business, one state, or one society, to give others the courage to stand up as well to fight for what they want.

Through looking at the actions of Sears during the late 19thcentury, we are able to see that a small act of defiance against the Jim Crow laws by Sears can go a long way. They were able to give African Americans the opportunity to be treated the way the state should have. Businesses have the ability to change society for the better if they just choose to act, the way Sears did.

1 Comment Posted on by noah_roberts1 business, state, and society, unacknowledged assumptions

The Private Business of the Public Government

Noah Roberts

To an extent, almost every American values, or is at least told to value, the free market society. We often hear references to Adam Smith and his proclamation for a free market and automatically pair it to the idea of no government interference in corporations. Many will often argue, “Let the government deal with the issues of the government, and businesses deal with the issues in business.” But, what if we shift our perspective on the relationship between innovative corporations and the government? We often look at the relationship as a black and white issue; government regulation or no government regulation. However, we should be focusing on the degree to which the government helps innovate, not regulate.

On her Freakenomics podcast “Is the Government More Entrepreneurial Than You Think?”, Mariana Mazzucato, a professor in the economics of innovation and public value at University College London, further explains this relationship. At the very start of the Podcast, Mazzucato completely flips the argument that Adam Smith wanted a free market separate from the state. She mentions how he actually wanted a free market from rent-seeking, which were activities that would extract value. This sets the foundation for the rest of the podcast where Mazzucato shows how the government is actually very involved in the innovation and investment of new companies. The state has been involved in many startup companies and industries. They are often the first to invest in the innovation of risky and uncertain technologies that private firms don’t want to invest in. This fuels her stance that the state shouldn’t be thought of as a last resort, but as a “first resort investor”. They have had plenty of successful investments, as well as plenty of failures. She brings to light, however, that the failures are always talked about and not the successes. This led to Mazzucatos’s point that the government has done a poor job of making returns on their successful investments, and that the private companies are benefiting the most of these tax funded loans given to them from the government.

The big idea most evident throughout this podcast, is the relationship between business, state, and society. Mazzucato mentions how many people think that to be more innovative we need less government. However, she disagrees. One of the most innovative parts of the U.S. economy is Silicon Valley. Most would assume that this is because of the private companies’ own research and advancement. What most fail to realize is that the government was deeply involved in investing in innovative research with programs like DARPA and ARPA-E. The government was also a leader in the exploration of fracking in the late 1920s, spending more than $130 million on extraction techniques. This point alone shows how essential the governments involvement with business innovation is. Other private companies didn’t want to take the risk of investing that much money into a business that may fail, but the government’s leadership into that field led to a very essential part of our economy. The government has also loaned money to, and invested in, multiple outside corporations. A successful company that most of the public fails to realize was given state funding is Tesla, which was given a $465 million loan. On the other hand, when the state funded company Solyndra failed after receiving a $500 million loan, every taxpayer was told about it on the news and as a result, angry with the government. The question is why was the success drowned out and the failure brought to the attention of everyone? The answer lies within the governments poor marketing of themselves. They don’t publicize their affiliation with companies like Tesla enough, which results in heavier criticism when they invest in a failing company.

The government also makes the unacknowledged assumption that having businesses give them stock when they can’t pay off the loan will cover the debt of the money given. Mazzucato mentions that the government will ask for 3 million shares of stock when a company does not completely pay off its loan. This policy doesn’t make much sense to enforce, however, when the stock is most likely not going to be worth very much. The government actually needs to be doing the exact opposite. Every time the company is able to pay off their loan, they need to give the government 3 million shares of stock. If we revisit Tesla, their stock was worth 9 dollars in 2009 and increased to 90 dollars by 2013. Mazzucato noted that this increase multiplied by 3 million would be able to pay off the debts of other loans that were not paid back in full, like Solyndra. Instead, Elon Musk has made a profit of $5 billion, while the government is left with the debts of their unreceived money.

Lastly if we revisit the relationship between business, state, and society and the capitalist nature of corporations, we can see why industries like the pharmaceutical industry are able to charge such high prices. Like the companies mentioned earlier, the state is loaning money to pharmaceutical companies for research. These loans of course come from the tax payer. Then, in the capitalist ideal of maximizing profit, the company will charge outrageous prices for new pharmaceuticals. People then have the choice to either let themselves or a family member stay ill or pay the price set before them. Essentially, this results in the customer paying for the drug twice. Once through the tax funded loan, and again on the overpriced market. The most frustrating part about the high prices may be that even though the government has the right to set a price cap for publicly funded products, they choose not to in fear of pushback saying they are anti-free market.

Overall, these points are not trying to prove that we need more government investments in the business world. What they do prove though is that the government needs be recognized as more than a by-stander waiting for things to go awry. As Mazzucato put it, “it is to be an active co-creator and co-shaper.”

 

(Picture found on politicalcartoons.com)

 

 

 

2 Comments Posted on by preston_taylor1 Uncategorized

How Sears Thwarted Jim Crow

Preston Taylor

In a recent article of the well-read “Washington Post,” Antonia Noori Farzan explains how the famous department store Sears circumvented Jim Crow laws during the early 1900’s by the use of mail-order catalogues.  Entitled “Sears’s ‘radical’ past: How mail-order catalogues subverted the racial hierarchy of Jim Crow,“ this shows an interesting connection a well known business has with society and the laws that governed it almost a hundred years ago.

Image result for sears catalog 1900s

(Image from Amazon)

This article caught my eye because I enjoy analyzations of the ways companies interact with the communities in which they do business.  Since the main function of any entrepreneurial venture is to make money for those who start it, I feel that often times, businesses get a reputation of being greedy, and not benefiting anyone but themselves, as seen in this article by Harvard Business School.  This predisposition towards a distrust of big businesses is something that can be justified in certain circumstances, but more often then not, companies help society more than they hurt.  I enjoyed this article because it was a prime example of a business having a positive impact on its customers and the people that it served.  With this in mind, the article seems to closely follow the relationships between Business, State, and Society that we have been analyzing in class.

The very title itself mentions a particular law, a people group, and a corporation and how they interacted with each other during this time period.  The article describes how, from the end of slavery in the south to the end of the Jim Crow laws in 1964 and even beyond, African Americans in the south were widely discriminated against when it came to purchasing supplies from their local stores.  Thanks to these laws, it was legal for the white store owners of the small general stores that African Americans were forced to shop at to use extremely prejudice techniques when dealing with their black customers.  Typically, shopkeepers would refuse to give honest and fair credit, only offer them inferior goods, and gouge prices so African Americans had a difficult affair any time they needed supplies.  This changed drastically when Sears’ mail order catalogs began to circulate.  Instead of facing the unjust general store environment, African Americans simply had to write in their orders on a piece of paper to receive them in the mail a couple weeks later.  Made possible by a particular government regulation, the Rural Free Delivery Act, the mail service was opened to rural areas throughout the south, areas highly populated by African Americans.  This is a great example of the government helping businesses in the late 19th century expand, as it would increasingly do until the Gilded Age.  The catalog business helped black culture to broaden and expanding the minor freedom it gave from Jim Crow laws.

Julius Rosenwald, who had become a part owner of the company after Alvah Roebuck sold his share of the business in 1895, became a well-known philanthropist to the black community. He donated $4.3 million — the equivalent of more than $75 million today — to open nearly 5,000 “Rosenwald schools” in the rural South between 1912 and 1932, when he died.

Antonia Farzan goes of to explain other ways that Sears company and its executives helped African Americans free themselves from the oppression of the Jim Crow Laws.  This article provides more information about Julius and his schools, as well as the ways they benefitted the black community.

In all, the capitalistic nature of the Sears corporation had, opposite to one’s initial assumption, a positive impact on the communities within which it served.  Sears bypassed Jim Crow to expand their business, helping thousands of African Americans in the process.  Rural blacks gained access to needed goods and, as the article says best, their dignity.

2 Comments Posted on by jacob_gochis1 Uncategorized

Commerce is Blind?

When I think of Sears, I think of the holidays when I was young and my dad would take me out for some last minute Christmas shopping for the other members of my family. However, this holiday season there will be no last minute gift runs as Sears is the latest casualty of the retail industry. But before they were a name associated with my holidays or a case study in “creative destruction,”  Sears seemingly filled a role as an equalizer in a segregated society.

A Washington Post article dives into the Jim Crow South to examine the anomaly in conducting business that the Sears Catalog was. At a time when segregation was a societal norm, reinforced by the laws that state governments had passed, certain businesses reaped great rewards from moving past these boundaries and courting a market that many in the South had spurned, African Americans. This article brings to the forefront the relationship between business, state, and society as Sears acted in a way that diverged from the norms of state and society at the time.

During this time, African Americans attempting to shop at brick and mortar stores faced many challenges:

…Store owners fiercely defended the white-supremacist order by making black customers wait until every white customer had been served and forcing them to buy lower-quality goods. “A black man who needed clothing received a shirt ‘good enough for a darky to wear’ while a black family low on provisions could have only the lowest grade of flour,” historian Grace Elizabeth Hale wrote in an essay published in “Jumpin’ Jim Crow: Southern Politics from Civil War to Civil Rights.”

Things changed with the Sears catalog. The Sears Catalog enabled African Americans in the South access to the same quality of goods as their white counterparts without fear of antagonism and humiliation. In addition to this, the Catalog appealed to rural Southerners who were not as highly educated by allowing requests written illegibly or in broken English to be processed and have the goods shipped.

In addition to business, state, and society, we also see the appearance of unintended consequences  and unacknowledged assumptions. While the owners of Sears may not have been intentionally championing consumer equality, store owners in the South would have you believe that was their exact intention.Threatened store owners spread the rumor that Sears was actually being run run by “black men” who “could not afford to show their faces as retailers.” They took to organizing burnings of the Sears catalogs and offered rewards for those who brought the most to be burned. The company responded by publishing pictures of their owners, clearly showing they were white, to put down these rumors that (tragically) could have affected their operations.

We have talked in class about how firms adjusted their strategies to different groups in society dividing them along lines of gender, region, class, and ethnicity, however the Sears catalog strikes me as something different and perhaps as something revolutionary for its time even if that was not is intention. Justice in our society is often portrayed by Lady Justice wearing a blindfold as if to view each case impartially and not let certain biases cloud her judgement, “Justice is blind.” It seems that Sears created a somewhat similar effect in the marketplace. It did not matter who you were, what color your skin was, your gender, or even your education. The sears catalog simply provided goods to be bought, and if you requested goods and provided the money, you would receive the goods. In this way, Sears made commerce blind, and whether it was their intention or not, they challenged a societal structure rooted in discrimination and enabled a generation of African Americans an equal access to the market place.

 

 

 

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How Sears Mail-Order Catalogues Subverted Jim Crow’s Racial Hierarchy

[Image from amazon.com]

Most people would never guess that the slightly odd smelling, usually abandoned Sears at your local mall was on the leading edge of the civil rights movement in the early 1900’s. Antonia Noori Farzan seeks to enlighten the public on Sear’s racially progressive ideas in her article “Sears’s ‘radical’ past: How mail-order catalogues subverted the racial hierarchy of Jim Crow”

The Big Idea that is tackled by Farzan is business, state, and society. She begins the article by stating her overarching belief in what Sears was able to do for the black community.

[Sears] revolutionized rural black southerner’ shopping patterns in the late 19th century,                         subverting racial hierarchies by allowing them to make purchases by mail or over the                             phone and avoid the blatant racism that they faced at small country stores.

Let be begin by breaking down this quote in terms of our Big Ideas. Sears business model was relatively simple, they were a large department store and in order to extend their business to rural areas, where it wasn’t feasible to build a brick and mortar store, they began sending out mail-order catalogues so that customers could call in their orders and have them shipped to their homes. Incidentally, this led to blacks using the catalogues as a way to avoid the discrimination that they were facing in their local country stores. Regarding the effects of government, the Sears catalogues were being shipped during the peak of Jim Crow laws. In Sears actual stores they had to comply with Jim Crow laws, so blacks could only have jobs in the warehouse or as janitors. Lastly, in terms of social situations, blacks were outwardly discriminated against. Farzan writes about how in their local stores black were always served last and given the lowest-grade items. Because there was no discrimination when the business couldn’t see the color of your skin, blacks took to the Sears catalogue where they could get high quality items without fear of prejudice.

The Sears company influenced black culture in other says. Culturally, their cheap steel-guitars allowed for a whole new genre of music- Delta blues. Without the catalogue, blacks wouldn’t have been able to afford these steel string guitars, but at Sears, they were only $1.26 ($50 in today’s dollars), giving low income individuals access to music. Furthermore, Rosenwald, a part-owner of Sears, donated over $75 million (in today’s dollars) to education. His money created over 5,000 schools in the rural south, leading to the advancement of education for black children. In the 1930’s 1 out of every 3 black students went to a Rosenwald school until they were shut down after Brown v. Board of Education.

Sears policy of commercial inclusion for minorities wasn’t without backlash. Local merchants were known for paying people to steal/ collect Sears catalogues and having bonfires with the collected books. The reasoning behind this is two-fold. First, Sears was taking business away from them because the customers that were usually buying items from the store were instead ordering from Sears. Second, they didn’t want blacks to be able to have access to the same quality products that they did.

Overall, we see that Sears had a large part in introducing minorities, and specifically blacks, into the marketplace following the Civil War. Although the company was not without its flaws, it paved the way for the Civil Rights movement and the equality between all groups that we now enjoy in America.