Online Extra: Jesse Jackson on "Savage Inequality"

The controversial civil rights leader talks about the economic effects resulting from the broken promise of equality

Millions of African Americans benefited during the economic boom of the past decade. They rose from working-class poverty to middle-class prosperity, from high school dropouts to college graduates, from jobs as cooks and clerks to sales managers and CEOs. Despite this, the gains of African Americans can't be measured in isolation. First, blacks and whites have a long and troubled history in America like no other. So black progress, it seems, must be measured relative to that of whites. For without parity between the two, America suffers.

Educational depravation and joblessness among blacks is sending millions of them underground -- into crime, jail, and sickness. It requires tax money by all groups to boost police enforcement, prison management, and health care. Even though the output of the nation's workforce has expanded an average of 4.2% annually since the end of 2001, it could be even higher if so many young black men weren't dropping out of the labor market.

BusinessWeek's Chicago Correspondent Roger O. Crockett recently sat down with civil rights activist Reverend Jesse L. Jackson to talk about these disturbing facts and the difficult questions they pose. Though controversial, the president of the Rainbow/Push Coalition has been grappling with the challenges surrounding race in America for more than 40 years. Here are edited excerpts of Jackson's conversation with Crockett:

Q: Blacks have made a lot of progress over the past decade, but compared to whites, black progress isn't so impressive. Why is it important to look at the gains in relation to whites?


We refuse to put in context why blacks are on the bottom. We were put on the bottom by law. There's a distinction between those of the slave tradition and those of the immigrant tradition.

No other group is referred to as three-fifths human in the Constitution. No other group was told by the Supreme Court that you have no rights to respect. No other group's position provoked a Civil War. No other group required an Emancipation Proclamation and then the 13th, 14th, and 15th Amendments. The promise to give the black man equal standing lasted from 1863 to 1896. The Supreme Court then was the architect of Jim Crowe.

Dr. [Martin Luther] King's speech should never be referred to as the dream speech -- it was the broken-promise speech. He stood with Lincoln behind him who promised emancipation. Here we stand 100 years later in savage inequality. The promissory note has bounced, marked insufficient funds, 40 years after [King's speech].

Q: In what specific ways has the promise been broken?


Blacks have less access to capital, still face insurance predators, mortgage-lending predators, banking predators, lack of access to housing, consistently go to the worst primary and secondary schools, have the highest infant-mortality rate, the shortest life expectancy, the highest homicide rate, highest fratricide rate. We're No. 1 in cancer deaths and HIV/AIDS deaths. In virtually every negative category, blacks are No. 1 because the promise has not been honored.

King's message was that he dreamed of a day when the promise will be honored. We're focusing on the dream and not the broken promise. Even though there has been some rising of boats in the last few years, [blacks] still remain without equal protection under the law. That's why there's race profiling in insurance, housing, and mortgage lending. [African Americans were denied mortgage loans 2.31 times more frequently than whites in 2001, according to the Association of Community Organizations for Reform Now, up from 2.07 times more frequently in 2000, and from 2.02 times in 1996.] In the ghetto, the very tax laws leave blacks less able to gain economic assistance in the system.

Q: Can you give me some examples?


There still is redlining by Zip code, redlining by race, by trust companies, banks, and pension funds. For most black and brown businesses in a city, county, or state contract, it takes them 60 to 120 days to get paid for work already done. In effect, small black businesses are subsidizing the city, county, and the state. They cannot borrow money from the bank for a bridge loan because the payment schedule isn't predictable enough.

If you've done the work and you can't get paid, the bank won't lend you money. So you either go out of business, or you go to the factor. The factor [a cash advance based on the total value of the invoices that you provide as collateral] will lend you money for [interest rates of] 30% to 35%, which is greater than the margin of profit. So it's almost like you are trying to grow grass on hot sand.

On that side of town, the bank becomes payday loan, the bank becomes currency exchange, the bank becomes credit-card manipulation. Something like 80% of black businesses use their credit card as their lending institution.

Q: Well how do we get to the bottom of this to reverse it?


I asked one of the biggest builders in New York one time why

he didn't have any buildings north of Central Park. He told me there are more tax incentives to build on the southern side [near midtown Manhattan]. The institutionalized racist structure often denies an even playing field. That's why these businesses find it so difficult to grow.

Q: Don't black businesses also face plain old discrimination?


Yes, there's subjective stuff. You do business with people you know trust and like. If you don't know, trust, like, and you're afraid of people, you will not give them the subjective margin of trust.

Q: What are the two or three programs you can point to that have been successful at addressing these kinds of inequities?


The law. When it's illegal to discriminate in government contracts. When it's illegal to deny black and brown kids access to college. We see progress.

Why do you have in all these big universities women's basketball teams and track and tennis teams? Because of Title IX. It is illegal to lock women out. If it was just left to male athletic directors, they would say they cannot fund their football program if they spend their money on women. But it's illegal to put all money in male sports.

So, change takes place when the law provides an infrastructure for support. That's why you have the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance. Nothing is more fundamental than the law.

    Before it's here, it's on the Bloomberg Terminal.