Remember my friend Chidrup?
When I told Chidrup, who is from India, that I am working on a project about the problems of racism in the US, he was puzzled. He sees the US as a place of education and boundless opportunity for everyone. After all, when he arrived in the US he rapidly linked into a network of people from his home country who have helped him get a grip on the rungs of the ladder: an apartment, a used car, etc.
I once confessed to Chidrup that I think of our neighborhood as a tidal pool that harbors all sorts of exotic life forms. New immigrants flourish inside the pool for a year or two until they are strong enough to leave it. Then, predictably, they move on to another “better” neighborhood, frequently in the suburbs. Like a tidal pool, wave after wave of new immigrants nourish our Chicago neighborhood with their talent, hard work and energy.
The rapid climb of recent immigrants is sometimes viewed with resentment by US citizens, particularly by black Americans dealing with a history of exclusion, the problems of unemployment, low wages, etc. An extreme example of this resentment manifested in riots in Los Angeles in 1992 where primary targets were Korean shopkeepers.
One of the things that isn’t obvious about the success of some Korean shop keepers, and more generally, members of immigrant communities, is there are approaches to raising capital in ethnic enclaves that aren’t typically available to Americans.
I was reminded of this recently when my friend Shelley told me about a black woman she knows who, feeling blessed by a prosperous year, declared her thanks to the Lord aloud during a church service vowing to make a larger-than-usual donation. On the way out of church she was approached by several fellow congregants asking for help with crisis situations, and by the time she got home, she’d given away the entire bonus she’d earned that made her feel so prosperous in the first place.
This woman’s experience of being financially obligated to others in a social network exists in many cultures in the world. In the US, however, as you move up the social scale to middle and upper-middle class, the obligations narrow. Ironically, the more financially comfortable you become, the less likely you are to be financially obligated to anyone other than close family members. On the other hand, we are missing the financial benefits of social networks, too, benefits that many immigrants have.
For better or for worse, we live in a capitalistic society. Capital, simply put, means having the leverage available from the use of a sum of money. Having capital means, “getting ahead” by controlling money beyond your immediate needs. One’s entire economic future could hang on just a few critical hundred or thousand. But raising capital is a tricky business. It calls for savings, strategizing, carefully planned debt and the ability to guard access to your purse.
The hidden advantage that Asian immigrants have: rotating credit associations built on relationships of trust. Koreans call these associations “Kyes.” (Brettell, Caroline. Constructing Borders/Crossing Boundaries, p245.) Although the specific financial rules may vary from one association to another, the basic principle is that members pool their savings and take turns borrowing the accumulated savings in order to capitalize a business. As soon as possible, the borrower repays the Kye and the money is lent to the next in line.
Many Mexican immigrants participate in “la tanda,” an informal rotating credit association among friends. For example, my friend Susannah contributes to “la tanda” organized by the kitchen staff at the restaurant where she works.
La tanda is a very simple idea. Everyone puts a set amount, say fifty dollars, into a pool on payday. Over time each member, in turn, gets the lump sum in cash. This means that once every few months each participant will receive capital— perhaps enough to leverage a bigger acquisition or to start a small business. And while it is effectively just a way of saving fifty dollars a week, for many people, saving is easier to do when there is a community of people who are working together to get ahead.
I don’t pretend that having a lump sum without knowing how to invest it is going to make a meaningful difference for everyone. But there is a related worldwide trend: micro loans— small, short-term loans intended to fund small businesses. And a small amount of capital, married to a burning desire to succeed can make a huge difference anywhere in the world.
While micro lending started as a “third-world” phenomena, there is evidence of interest here in the US, as demonstrated by new online lending organizations where it is possible to borrow small amounts from individuals. And when you consider the terrible economic burden of credit-card debt and payday loans, along with the need for low-cost capital for small business ventures, this may really offer a solution for Americans, too.
Plus, if you have small amounts of capital, you can invest in making small loans to other people at a higher rate of interest than a bank might pay. Perhaps this is the missing link for American’s—a more social way of borrowing and making money that fills a gap—at least until the traditional financial institutions block the way.
