Wednesday, May 26, 2010

The capitalist retort to discrimination

I found this post on Rand Paul's racial snafu quite interesting:

The Times editorial and other media pronouncements have perpetuated a drastic misreading of history and of government’s role in ending racial discrimination in this nation. This history is far more nuanced than is widely assumed. At the center of the Jim Crow system lay the “Jim Crow laws.” They were indeed laws, i.e., requirements that persons and businesses and government agencies must practice racial discrimination or face civil or criminal penalties. In other words, government had bolstered discrimination instead of suppressing it. For example, the famous 1896 Supreme Court decision in Plessy v. Ferguson, which endorsed “separate but equal” treatment in railroad travel and eventually in other spheres such as public education, was about whether an 1890 state law in Louisiana requiring segregation was constitutional. The court said it was.


My experience with the rights of sexual minorities makes me skeptical that a liberation movement can be wholly successful without government backing, so I support government intervention for both sexual and racial liberation. Still, Mr. Calfee is right to conclude that the standard narrative that pits enlightened government officials against racist business owners doesn't wash. Jim Crow wasn't so much the freedom of association run amok as it was a majority using the levers of democratic governance to secure their supremacy. It remains largely mute on the possibility of promoting tolerance through non-coercive means, and on the question of whether freedom of association is compatible with a pluralistic society.

In fact, boosters of the free market would have us believe that one promotes the other. This argument takes many forms, but the one the article posits is that there is an economic incentive to practice non-discrimination. In its own words:

By the 20th century, the Jim Crow system was vastly diminished in the North but had become thoroughly embedded in the South—through government action—despite the incentives of many business owners to reap the economies of scale and consequent profit from treating all customers alike.


Color me skeptical that the free market tends to dampen the enthusiasm for discrimination. There's an unfortunate tendency to view economic man as a straw version of a utilitarian- someone who keeps his nose to the grindstone, is unconcerned with ideology, and in the end driven only by the almighty dollar. We're to imagine someone who buys all the off brands when grocery shopping, because they offer a better deal, and someone who feels that the demands of ideology are so much dust in the face of tangible currency.

Of course, this isn't an accurate description of humanity as a whole, nor is it the description of man as studied by economists when they're doing their jobs right. The father of the discipline, Smith, was fond of citing varying degrees of honor given to professions to explain their different wages. Rather than a fascimile of utilitarianism, Smith's humanity was concerned with things other than filthy lucre. If economics is to accurately describe human action, it must take these things into account.

If the bottom line were all that drove humanity, Mr. Calfee's analysis would be substantially correct. Yet monetary- I hesitate to say economic, for other areas of human action are as amenable to the discipline as practical things- considerations are not all that drive humanity, even and especially in the realm of commerce. Many are willing to spend more money on environmentally-friendly products. Many refuse to spend their money on corporations that have politics that are hateful to them.

In other words, capitalism is far from a panacea because some people will attach an economic value to expressing their racism. Any advertising executive will tell you that ideas and values are as important to commerce as practical utility. Even setting aside clearly erroneous beliefs that workers of different races will be less competent to do their jobs, racist business owners will feel an incentive to practice racist policies because their beliefs are deeply held. And those who patronize those businesses will express their displeasure in racially progressive hiring policies by shopping elsewhere.

So it would have transpired, anyway, if the libertarian solution to race problems had prevailed in the Jim Crow south.

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