Big Government and Affirmative Action: The Scandalous History of the Small Business Administration [Hardcover]

Jonathan Bean (Author)

Book Description

Publication Date: August 3, 2001

" David Stockman, Ronald Reagan's budget director, proclaimed the Small Business Administration a "billion-dollar waste -- a rathole," and set out to abolish the agency. His scathing critique was but the latest attack on an agency better known as the "Small Scandal Administration." Loans to criminals, government contracts for minority "fronts," the classification of American Motors as a small business, Whitewater, and other scandals -- the Small Business Administration has lurched from one embarrassment to another. Despite the scandals and the policy failures, the SBA thrives and small business remains a sacred cow in American politics. Part of this sacredness comes from the agency's longstanding record of pioneering affirmative action. Jonathan Bean reveals that even before the Civil Rights Act of 1964, the SBA promoted African American businesses, encouraged the hiring of minorities, and monitored the employment practices of loan recipients. Under Nixon, the agency expanded racial preferences. During the Reagan administration, politicians wrapped themselves in the mantle of minority enterprise even as they denounced quotas elsewhere. Created by Congress in 1953, the SBA does not conform to traditional interpretations of interest-group democracy. Even though the public -- and Congress -- favors small enterprise, there has never been a unified group of small business owners requesting the government's help. Indeed, the SBA often has failed to address the real problems of "Mom and Pop" shop owners, fueling the ongoing debate about the agency's viability.

Editorial Reviews

From Booklist

Bean is an associate history professor at Southern Illinois University and author of Beyond the Broker State: A History of the Federal Government's Politics towards Small Business, 1936-1961 (1996). He now continues to look at the role government plays in small business with this critical history of the Small Business Administration, which was established in 1953 as a "tiny lending agency." Bean's overriding theme is the contradictory nature of the SBA. Supposedly established to advocate for small-business owners and free enterprise, the agency's biggest support comes from Congress and it is frequently the target of critics of big government. Bean highlights the "corruption, fraud, and incompetence [that has] marred its minority enterprise programs," but he focuses on the "affirmative action" role of the SBA--first as it favored small companies over large ones and later, beginning with the Nixon administration, as it targeted loans to black-owned businesses. Nearly a third of Bean's book is devoted to notes and an extensive bibliography. David Rouse
Copyright © American Library Association. All rights reserved

Review

"Bean is a master of administrative history, not just of the SBA but of the tremendous expansion of American government, especially beginning with and then flowing from the New Deal." -- American Historical Review

"[Bean]has a love/hate relationship with the SBA, and this tension is visible throughout his meticulously researched monograph." -- Business History

"Claims that the SBA did not help truly disadvantaged businesses but its affirmative action programmes benefited politicians in both parties who used it for their own gains." -- International Review of Administrative Sciences

"His careful analysis, his all-encompassing bibliography, and his inclusive endnotes make this the definitive monograph." -- Journal of American History

"The first full-length academic assessment of the agency. At once a powerful argument for killing off the agency and a shrewd analysis for the political impulses that make its termination nearly impossible." -- Wall Street Journal

See all Editorial Reviews

Product Details

• Hardcover: 240 pages
• Publisher: The University Press of Kentucky; First Edition first Printing edition (August 3, 2001)
• Language: English
• ISBN-10: 0813121876
• ISBN-13: 978-0813121871
• Product Dimensions: 9.4 x 6.4 x 0.8 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #1,340,999 in Books (See Top 100 in Books)

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2 of 2 people found the following review helpful:

5.0 out of 5 stars A Smoothly Written and Often Amusing Policy History, September 4, 2003

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From The Independent Review (Oakland, CA) - See all my reviews

This review is from: Big Government and Affirmative Action: The Scandalous History of the Small Business Administration (Hardcover)

"In "Big Government and Affirmative Action," Jonathan J. Bean tells the story of the role of small business in the growth of the American state. This compact account is a fine sequel to the author's award winning "Beyond the Broker State: A History of the Federal Government's Policies Toward Small Business, 1936-61" (Chapel Hill: University of North Carolina Press, 1996). It describes the process by which interest-group actors (business groups, congressional committee, and bureaucrats) operate to build nearly indestructible government programs. In addition, the book adds an important dimension to the story of the development of affirmative action. In manifold ways, congressional and bureaucratic policy toward "disadvantaged" businesses adumbrated later policy toward disadvantaged minorities and myriad of other victim groups, and the Small Business Administration (SBA) itself took up minority preferences as its raison d'etre."

Jonathan Bean pulls no punches in this nonpartisan look at an agency notorious for corruption. Republicans, he explains, have supported the Small Business Administration to deflect criticism that they are beholden to "big" business, whereas Democrats have supported it to show that they are not "anti-business."

"Bean has done a model job in producing a smoothly written and often amusing policy history, and the University Press of Kentucky has done excellent work in editing and publishing it."

5.0 out of 5 stars Inside Look Into The Small Business Administration, July 9, 2011

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Smoss "Smoss" - See all my reviews

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This review is from: Big Government and Affirmative Action: The Scandalous History of the Small Business Administration (Hardcover)

The author Jonathan Bean provides an excellent look into the history of the Small Business Administration and how the SBA transformed from a temporary government program established after the abolition of the Reconstruction finance Corporation into a massive bureaucracy promoting affirmative action through credit to "small business" in the inner city. Beginning with President Eisenhower, the administration used the SBA for patronage for Republicans and establish the image that the president was promoting small industry which demonstrated the programs usefulness to congressional leaders who were opposed to ending the agency which marked the transformation from a temporary agency into needed asset to government.

Real changes occurred in the 1960's when the race riots began to break out throughout the country. Many politicians believed that the riots were the result of the disadvantaged inner city minority populations who were unable to access credit to build their own businesses. As a response, many civil rights leaders and politicians backed efforts for affirmative action in lending in the SBA to offset the anger portrayed in the city riots. This also began Nixon's campaign of "black capitalism" advocated in the late sixties/early seventies where they were going to use the SBA to establish quotas through lending to minority businesses. Although racial preferences were established in the 1960's in what was supposed to be a colorblind agency, the policies of the 1970's officially ended the colorblind practice and helped establish affirmative action within government. At first the lending was aimed at the inner city black businesses, but by the 1970's the SBA saw many other minority groups (hispanics, asians, women) entering as part of the disadvantage minority, which many believed that it would cut into the amount to help black businesses and caused a rift within the different communities. The Reagan administration also helped support affirmative action by providing the largest set-aside amount for minority business. The author does a great job in presenting the information on racial lending standards of the SBA which involved both parties trying to gain voters of the different minority groups. The democrats supported the SBA to show they were pro-business and the Republicans supported to show they were pro-minority.

Mr. Bean does a great job in detailing the corruption/failure in the lending policies of the SBA. First, there was no definition of what a small business was and much of the lending taking place in the SBA was to medium to large size companies with political connections. Much of the money lent to many of the disadvantaged borrowers resulted in the companies going bankrupt causing millions in losses. Many minority business were front groups for other businesses, and there were ties to lending money to the mafia. The Wedtech Scandal was a major scandal of the SBA that played out in the Reagan Administration and the Clintons involvement in the Whitewater Scandal had ties to the SBA. The author provides a large amount detail into the scandals involved with the SBA from the beginning into the Clinton years. Much of the SBA lending were subsidies to failed businesses because they couldn't compete many of whom were medium/large companies. The SBA and their commitment to "black capitalism" often left the communities in worse shape because after they failed, they still had to pay off the loans which left large debt burdens on the communities. As Jonathan Bean shows the SBA is a failed institution which promised a commitment to small business and minorities but failed to deliver.

Big Government and Affirmative Action is by far the best book on the history of the the Small Business Administration. There is a lot of information contained in this book than the few examples discused. Jonathan Bean's writing style makes the book really easy to read that shows why it's a scandalous history. The book is well researched/documented and will hopefully make you see the SBA in a new light.