The Answer to Racism is Liberty, not Socialist Affirmative Action
By Alec Rawls © 1996/1998. (1100 words) Originally published in The Thinker, 2/22/96

The real issue of affirmative action is not black vs. white or male vs female, it is capitalism vs. socialism.

In general, those who are for big government are fundamentally socialist. They know that capitalism is powerful, but they believe it is evil and that the proper role of government is to siphon off the power of capitalism and use it to mitigate the evil of capitalism as far as possible. In contrast are individualists -- like the authors of the Constitution -- who believe that individual discovery and pursuit of value, combining freely with others in private agreements limited only by prohibitions on force and fraud, is the ideal engine for achieving good, only needing to be complemented by social policy in a few areas where markets do not work.

Racial discrimination, even virulent racial discrimination, is a perfect example of a social problem that can be solved by competitive private agreements. Why do people think the Jim Crow system of legally enforced segregation came about in the first place? It was because those employers who practiced racial discrimination and discounted black merit started losing the battle of the marketplace to competitors who availed themselves of black worth. The same thing happened in South Africa. The only way to maintain a segregated society was through apartheid because private agreements were bringing about integration. (Richard Epstein amasses impressive evidence for this thesis in the case of Jim Crow in his book Forbidden Grounds.)

There are only two scenarios by which discrimination can survive in competitive markets. In the first, individual firms that possess rent earning assets (such as patents, or good land, or profitable subsidiaries) can use those rents to subsidize the losses that racial discounting of merit imposes. Out of the vast number of businesses there will always be some who act this way if allowed, and allowing them is of little consequence. Employees -- who don't bother looking at the 90% of least likely employers anyway -- are unaffected if amongst this 90% are a few really unlikely employers. They just go where their services are valued, and over time those firms that fail to fully account black worth will steadily lose ground. (These arguments were made by Milton Friedman in Capitalism and Freedom and refined by Epstein, ibid.)

In this case, freedom of agreement works against racism. Abrogating freedom of contract (as is done now, where government oversight has interposed itself through anti-discrimination law) only keeps these benign market processes from working and itself becomes the problem. Instead of taking risks on employees, firms must focus on the paper trail, taking those who are on paper most qualified. This clearly runs against those minority members who are trying to escape a dysfunctional culture and are likely to have spotty backgrounds. The only minority members it will help are those who have already assimilated to the standards of the broader culture and don't need help. (Again, for a thorough statement of this thesis, see Epstein, ibid.)

The second way that discrimination could survive in a market system is if racism is pervasive. This could leave insufficient takers for black worth (though in such a society free markets are clearly a partial antidote, as members of discriminated against groups can patronize each other). Further, in a pervasively racist society, customers might be willing to pay a premium for goods and services from discriminating firms, just to support discrimination. Then racist firms would not have to pay a penalty for racism, as their subsidization of racism would be reimbursed by customers.

This second scenario would be of serious concern if it occurred, but this scenario depends on society being full of racial hatred. This fits very much with the socialist vision -- that private agreements tend toward evil -- but it is everywhere contradicted by the evidence of human nature. In a free society, where discrimination is not legally enforced, it disappears. Every modern study of modern American character reveals that a large majority of all races believe that people should be treated as individuals and judged according to their individual merits and demerits.

So why do we still have discrimination? First, discrimination is grossly overstated. The main reason blacks as a group have trouble getting into schools and jobs is because they are offering lower qualifications on average. This does present real problems of individual justice. If all that an employer knows about prospective employees is their race he will have lower expectations of those who are members of a group that on average offers lower productivity, regardless of whether as individuals they reflect the tendencies of their group. The answer to this problem is to unburden the employment relationship of racial liability, so that employers will be willing to take chances on individuals and discover their individual merit. Anti-discrimination employment law exacerbates rather than eases the problem of people being treated as members of groups rather than as individuals.

The 1964 Civil Rights act did not just strike down legally required discrimination. It also established its own set of impositions on rights of private agreement (at least as interpretted by the Supreme Court). It is no longer enough for firms to make the best business decision possible. They have to consider whether they can prove that a decision was motivated by business, not race. In consequence, hiring standards become fixated on grades and resumes and accumulated histories, that is on prejudging candidates, rather than on giving them a chance to prove themselves. It is easy to see who this hurts: those who have the hardest time getting someone to give them a chance.

In Forbidden Grounds Epstein traces how the immediate effect of the 1964 Civil Rights Act -- eliminating Jim Crow -- had a powerful positive effect on black prosperity, but after that, as the act's anti-discrimination restrictions on private contract worked their way through the courts, black fortunes have consistently declined.

There is no mystery here. The socialists aren't letting markets work, and their response to the inevitable failure of this strategy is always more of the same: screw down on markets harder, impose government oversight over everything, presume racism everywhere, make every decision liable to civil suit, and if this stabbing at the heart of our system to private agreement does grievous injury to all of us, so what? Markets are evil anyway, because the human heart is evil. That is the fundamental socialist presumption.

The perverse icing on the cake is how race conscious "solutions" actually create the very racial anger that can pose a problem. People have a perfectly rational expectation that members of minority groups have been promoted ahead of merit, which is not only a clear injustice, but perpetuates suspicions about the abilities of minorities. Second guessing someone who in expectation has been promoted ahead of merit is simply conscientiousness. We need to go the opposite direction, de-coupling race and expectation by believing in the decency of individual decision-making and letting people choose. Get government out of anti-discrimination law. As regards universities, the correct solution is the one that looks like it is going to come about, at least in California. The state will be barred from discriminating -- as it must be under any tenable reading of the Fourteenth Amendment's guarantee of "equal protection of the laws" -- but private institutions like Stanford will be free to discriminate to their heart's content, as they are already doing against whites. We won't be on the right track as a society until these opposite standards for public and private agreements apply universally.


Next article in the Liberty volume of Moral Science: Stop Calling Illiberalism "Liberal."

The next article in both Mr. Knowitall series: Disarm Criminals, not Law Abiding Citizens

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