What Racial and Gender Spoils Have Wrought

The Disadvantaged Business Enterprise program is an example of the downside of race- and gender-based federal assistance.

A recent Wall Street Journal editorial detailed the pervasive fraud with the federal Disadvantaged Business Enterprise (DBE) program.

The DBE program is just one of the scores of programs that dole out loans, preferences, and set-asides based on race, or more accurately, concocted races.  DBE adds gender to the mix.

As the editorial explained, “The DBE program, set up in the 1980s, steers money to small businesses that are at least 51% owned by ‘disadvantaged’ persons. Women are ‘presumed disadvantaged,’ along with people who are black, Hispanic, Native American, Asian-Pacific or Subcontinent Asian, although there are also limits on net worth and firm size. The government’s general goal is for 10% of its highway and transit funds to be spent with DBEs. But they’re supposed to do real work, not merely pass money through.”

The editorial didn’t say this, but programs like DBE explain why various ethnocultural groups have lobbied over the decades to be classified as racial minorities.  The latest manifestation is a new “race” that the government is thinking of formally adding to the list of racial minorities—namely, MENA, which stands for Middle Eastern and North African.

Below is a table from the online edition of the editorial.  It shows how many millions of dollars were distributed by race and gender in 2021 through just the DBE program.  (Look for a transgender category in the future.)

Predictably, as the table shows, when something is based on a specious premise, much of what follows will be incongruous.  The incongruities will be described after the table.

Disadvantaged Business Enterprise contracts and subcontracts in fiscal 2021, by DBE category, in millions of dollars

	WOMEN	MEN	TOTAL
Black	$114	$542	$656
Hispanic	$324	$1,374	$1,698
Native American	$46	$302	$348
Asian-Pacific	$105	$326	$430
Subcontinent Asian	$46	$306	$352
Non-Minority [White]	$2,525	$16	$2,541
TOTAL	$3,160	$2,866	$6,027

The dollar figure represents only the federal share.

U.S. Department of Transportation, WSJ Freedom of Information Act request

Incongruities

– Only $16 million out of the total DBE outlay of just over $6 billion, or 2.7%, went to white men, probably reflecting the premise that white men can’t be disadvantaged, although over 30 million white Americans live in poverty, and, it’s safe to assume, many of them are male.

– In the same vein, white women received over $2.5 billion, versus $16 million for white men, or 156 times more, although men have a lower life expectancy than women, commit suicide at four times the rate of women, graduate from college at a lower rate, and are imprisoned at a much higher rate.

– For all of the “races” except the white race, men have received considerably more DBE money than women of the same race.  The greatest difference is in the Hispanic category, where Hispanic men received over $1.3 billion, or four times as much as the $324 million received by Hispanic women.

– Hispanic men and women received nearly $1.7 billion in total, versus $656 million for black men and women in total.  Of course, there are a lot more Hispanics in the US population than blacks, even taking into account that many Hispanics are categorized as white.  But it should be remembered that set-asides such as DBE were first targeted to blacks and not other races. Clearly, the original intent has been subverted.

– No doubt, East Indians comprise the majority of the category labeled “Subcontinent Asian.”  East Indians rank at the top by a comfortable margin in household income compared to other racial/ethnic groups.  This is partly due to many Indian immigrants have been in an upper caste in India and thus having access to education and money.  It’s also partly due to how they tend to fund each other’s business ventures, which is how the Patel clan rose to dominance in the ownership of independent hotels in the US.  And it’s partly due to them having a high percentage of two-parent households.  Do they really need DBE money?

Historical Closing Note

If you’re at my advanced age and come from a poor ethnic family with immigrant grandparents, you know that programs such as DBE didn’t exist for your forebears and that they faced awful discrimination, albeit not to the degree of African Americans.  Yet, they funded each other as today’s East Indians have done and found a way to start businesses.  In my hometown of St. Louis, for example, the major construction companies in town were started by the Irish and Italians.

My dad was a non-union tile setter, and his sister was married to a union tile setter.  The sister (my aunt) and her husband (my uncle) raised five kids in a 700 sq. ft., one-bedroom flat, which they co-owned with my grandparents, who lived in the upstairs flat on a barkeep’s pay.  My mom and dad got the money for the down payment on my boyhood home through a private loan from my dad’s uncle.

Then there was Amadeo Peter Giannini.  The son of poor Italian immigrants and a produce peddler, Giannini started the Bank of Italy in San Francisco to provide banking services and loans to Italian fishermen who were shut out of mainstream banks.  The bank became the Bank of America.

Was this a better system than fighting over racial spoils?  I’m unable to be objective about that but certainly have an opinion, which I’ll keep to myself.