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Does Bigotry Pay in a Free Market? Absolutely.

123-347_AmerExp_Class_Apart_smallWEBOver at the men’s rights blog/on-line magazine A Voice for Men, German writer Jon Gunnarsson identifies what he sees as the flaws inherent with affirmative action.

Gunnarsson is, I suspect, not particularly well known ‘round these parts, but I’ve decided to quote him because he does put into writing rather succinctly an idea I have been hearing more and more on radio, cable news, and the Internet over the past six months.  This idea, which I tend to attribute to pseudo-libertarians[1], is this:

In a free market, bigotry doesn’t pay.  If for instance an entrepreneur [was] a true misogynist and didn’t want to hire women, no matter how qualified they are, then he is passing up opportunities for making profit. His competitors who do hire women will do better than him, making it difficult for him to keep up. If he doesn’t relent, his market share will decrease and eventually he may go out of business.”  [Emphasis mine.]

Some version of this talking point seems to be gaining a pretty firm toehold with consumers of electronic media, and because of this I’m going to take a moment to push back by stating the obvious: In free markets, bigotry actually does pay – a lot.  In fact, it is primarily the economic rewards of bigotry that make it so deeply ingrained and damned pernicious.  Take a look, for example, at the most clichéd examples of business-based bigotry in our own country’s recent history:

Howard Law may have churned out some of the greatest legal minds of their generation from the 1920s through the 1950s, but that didn’t mean that law firms across the country weren’t justifiably worried about losing their biggest clients were they to hire those minds to work on those clients’ behalf. Businesses in the pre-civil-rights South that refused serve African Americans didn’t make less money for their bigotry – they made more; a restaurant owner’s primary motive for having a white’s only seating area (or entire establishment) was profit.  In those bigoted communities, allowing economically disenfranchised blacks to sit with far wealthier whites meant losing profitable customers at the expense of ones who couldn’t afford to pay as much.  A suburban real estate agency in the 1970s that encouraged African Americans to buy into predominantly white neighborhoods risked having their business shunned by those community members that held the heavier purse strings.

Gunnarsson’s theories about economic pressures might hold up on the sterile world of paper, but so too does every bit of economic theorizing.  In reality, though, a bigoted society rewards bigoted business decisions; always has, always will.

Of course, none of this is to say that Affirmative Action is still necessary.  And in truth, this is an issue I go back and forth on.  Where to draw the line with race is particularly nettlesome, due to our unwillingness to wrap our heads around the issue: As a society, we are really terrible at having honest, self-reflecting talks about our own prejudices and bigotry. Rather, we prefer the easier (but not at all effective) strategy of largely agreeing that such things are black and white (sorry) and that everyone who agrees with us is not a bigot while everyone that disagrees is an example of the very worst kind. Because of this, it’s damned hard to get an accurate handle on where we are, collectively.  (Hell, seven years ago I’d have bet you $1,000 that the United States was waaaaay past the stage where a topic as profoundly stupid and racist as Birtherism could actually be a thing we seriously argued about, so what the hell do I know?)

Even in the comparatively easy sex-based subset of affirmative action, it’s hard to know where I should stand.  On the one hand, it’s hard for me to look at the Fortune 500 Who’s Who and not notice the lack of non-male (not to mention non-white) faces, or to believe that this is either coincidental or based entirely on merit.  On the other hand, Hanna Rosin makes a compelling case in The End of Men when she says that, as a whole, women in the United States today are actually far better economically positioned as potential bread-winners than are men.  Also, it’s hard for me to turn a blind eye to things that I suspect might very well be unintended consequence of gender-based affirmative action.  One of the great ironies I have noted in my years in risk management is that those industries that champion affirmative action to best secure a place for women in the work force (academia, government employees, white-collar unions) are the last industries where I see regular, systemic sexual harassment flourish unchallenged.

As I said, we’re never going to know exactly where we do or don’t need affirmative action (if anywhere) so long as we continue to fall back on those sophomoric platitudes that serve little purpose save allowing us to feel better about ourselves.  This idea that bigotry is inherently not profitable – and it’s unspoken but implied corollary, that profitable businesses can therefore not have bigoted policies – seems to be the fastest growing of these platitudes.  It’s in all of our best interests to push back when it comes up.

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[1] I should probably take a moment to note what I mean by pseudo-libertarian:

Since the 2008 election of the Kenyan sleeper agent bent on destroying our very way of life through socialism and Sharia law, social conservatives have doggedly tried to co-opt the descriptive phrasing of libertarian principles, but (and this is important) not the actual principles themselves.  Pseudo-libertarians invoke anti-government first-amendment rhetoric when opposing birth control provisions in Obamacare, for example, but are happy to demand that the government interfere with the legal building of mosques.  They will self-identify as libertarians as they defend a conservative photographer’s choice to refuse to take a gay wedding on as a client, but conveniently leave that that libertarian moniker at the door when the Episcopal church asks to be allowed to perform same-sex marriages.  When I say pseudo-libertarian, I’m thinking Glenn Beck, Sean Hannity and Rush Limbaugh – people who I see as very different animals than actual libertarians like Jason Kuznicki.

I should also note that I have no idea if Mr. Gunnarsson is himself a pseudo-libertarian, or if that’s even a thing in Germany.

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136 thoughts on “Does Bigotry Pay in a Free Market? Absolutely.

  1. Bigotry works just fine in a free market. Look, for example, at how quickly internet discussion sites become polarized towards heavily-left or heavily-right member bases.

    “But that isn’t bigotry! That’s the result of free exchange of ideas, and individuals seeking communities whose attitudes and mores they find most compatible to their own!”

    Welp. There we are, then.

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  2. Except Jim Crow Laws were just that – laws, not only custom. The State required a cartel to ensure that nobody cheated.

    Of course, bigotry is totally economically sustainable (but not maximally efficient) without the force of law backing it up – the North shows that well enough.

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    • “Except Jim Crow Laws were just that – laws, not only custom. The State required a cartel to ensure that nobody cheated.”

      Jim Crow Laws were not inflicted endogenously by Martians.
      The laws came from custom. And the laws/customs were frequently enforced by non-governmental terrorism.

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      • Doesn’t a lot of this depend on scale? In a small southern town, or portion of a state, where the oppressed population can be a significant percentage of the population, more force (governmental, private, quasi-both) is needed to enforce economic oppression and bigotry. But in an area where the minority is more diluted as a percentage of the population, the government enforcement of bigotry is less needed. Look what happened to Pepsi in the 1940’s when they tried to market to African-Americans in magazines like Jet with ads that actually featured positive, middle-class images of AA’s. They took a hosing on the national level for it and had to stop. No government enforcement needed. And this absence of AA themed and targeted advertising lasted well past the Civil Rights era.

        Why do discussions like this always seem assume small businesses in small towns? (where btw, the line between government and private power can be non-existent. In the pre-Civil Rights South the Klan, the Government, and local business leaders were as likely as not all the same people using all their sources of power to enforce white supremacy.)

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  3. Market forces work against employer bigotry. Market forces do [I]not[/I] work against customer bigotry.

    Even though they go hand in hand, the nuance is not a particularly complex one.

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    • It seems to me that given the existence of a sufficient number of non-rationally bigoted employers, the market forces support employer bigotry:

      Assume two widget manufactories: Acme Co, which refuses to hire women, and Brand Inc., which is market-rational.

      Acme and Brand both value the skills of a male widget maker, and will offer him a competitive salary. But Since Acme won’t hire a female widget-maker, Brand is a monopsony and can rationally offer her lower pay.

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      • Brand has lower labor costs than Acme. All else equal, no cartelization etc, Acme will be driven out of business. For a broader story, substitute ‘Discriminating employers’ for Acme, and ‘Non-discriminating employees’ for Brand.

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      • So Brand, having underpaid it’s female employees, has strengthened it’s market position in ways that it would not have if it had paid them a fair wage. Which is my point: The market doesn’t reward employers that don’t discriminate. It rewards employers who discriminate slightly less than their competition.

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      • “Brand has lower labor costs than Acme. All else equal, no cartelization etc, Acme will be driven out of business. For a broader story, substitute ‘Discriminating employers’ for Acme, and ‘Non-discriminating employees’ for Brand.”

        I think this depends entirely upon your potential customer base.

        For example, imagine that tomorrow SCOTUS declared all equal protection for employment null and void, and private companies could hire and fire for any reason whatsoever. Let’s say that a local fabricator immediately started advertising that it would never hire gays or Muslims.

        In my city of Portland, it’s hard to believe such a company would survive. The local boycotts and bad press would drive most of their business away; vendors and VIP clients might well find them too toxic make a continued business relationship worthwhile. But there are a lot of other parts of Oregon where such a marketing strategy would be hugely successful, and patrons would go out of their way to reward such a fabricator with orders, good press, and Chamber of Commerce awards.

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  4. One of the reasons I am strongly skeptical of libertarians or pseudo-libertarianism as you call it (and neo-liberalism to a lesser extent) is that it heavily rests on the assumptions of classical economics and the belief that people will always do what is in their rational self-interest.

    This is not true. People are emotional and social creatures and also tribal. There might have been many restaurant owners in Jim Crow America that wanted to have integrated businesses but they knew or realized that they would be out of business if they desegregated. Perhaps they would also be suspiciously denied a liquor license or find that their shipments of supplies would be delayed.

    Or perhaps this does show how going along with bigotry and hate can be a rational self-interest in a strict economic livihood sense.

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    • It heavily rests on the assumptions of classical economics and the belief that people will always do what is in their rational self-interest.

      There are too many absolutes in that sentence.

      This critique of libertarianism (and classical economics) I can get behind, to an extent, but the more fair way to characterize the classical economics position would be something along the lines of, “People will generally do what is in their perceived rational self interest”

      That is much less obviously wrong (and to be fair, I think it’s actually arguably correct, with a lot of provisos and caveats) than what you wrote, here.

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      • And it’s also the case that self-interest is largely self-defined–that’s an unavoidable consequence of the subjectivity of value. As ugly as it is, if a person simply hates Group X, then not dealing with them is meeting their self-interest.

        Of course that’s part of the reason free markets don’t necessarily eliminate bigotry, but can (or can, but don’t necessarily do so, whichever sequence one prefers)–the bigotry against Group X is one value competing against other values, which may include the greater profitability of not discriminating against Group X. Some people will ultimately value the profit over their bigotry, others will ultimately value their bigotry over their profit.

        Either way, they are following their rational self-interest, and classical economics is not actually undermined, although it may be refined to the extent the classicals incorrectly thought of self-interest only in terms of profit received, rather than value gained.

        As another example Hobby Lobby stores are not open on Sunday because of the owners’ religious beliefs. That’s a lot of sales to give up, so if we calculate self-interest only as monetary receipts, we might say they’re irrational. But irrationality’s going to take some hard explaining, considering what a successful company they’ve built. But beginning with the concept of subjective value, and understanding that money is not their only value, and that some things are worth more than the marginal increase in profits they would receive by being open on Sunday, that’s really quite parsimonious.

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      • Me too.

        it may be refined to the extent the classicals incorrectly thought of self-interest only in terms of profit received, rather than value gained.

        Not just the classicals, but comments on this very post giving the same, tired “mathematical” proof that markets, once freed from coercion, will necessarily end discrimination.

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      • I also agree with James’ comment.

        If we can agree that people’s “rational self interest” is not simply economic, but a mixture of many facotrs- economic interest, religious belief, personal bias, subjective valuations of good and bad outcomes- then it seems reasonable to conclude that whether or not a market is “free” or “unfree” makes only a slight difference in the total outcome of a society.

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      • Perhaps but the laws were also written by a fair number of businessmen and elites to keep their economic advantages. Mainly in the form of having low-paid labor and racial hostility between poor whites and worse off Black people.

        Some business people might have opposed Jim Crow but plenty saw it as being to their economic advantage.

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      • I’ll say this again. It was *illegal* for any business in the Jim Crow south to offer integrated service.

        No all states with Jim Crow laws had a legal requirement for segregated service (see this list). The famous Woolworth’s sit-ins were over company policy not legal policy.

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      • Musings about how the free market could take care of the de facto aspect of Jim Crow so long as the de jure aspects were not present are a wonderful exercise for a parallel universe in which Reconstruction wasn’t abandoned. In the real world, white supremacist terrorism in the former Confederacy went largely unprosecuted/unpunished. I think a strong case can be made that in the absence of a Separate Car Act, the Plesseys (and the railroads) of that time would have been treated to a 19th century version of the reception the Freedom Riders (and the bus lines) got, pour encourager les autres…

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    • The observation that “in a free market bigotry has opportunity costs” has absolutely nothing to do with whether individuals are perfectly rational or not. It’s simply true.

      Whether those opportunity costs are sufficient to eliminate bigotry is also another question. Those costs are a disincentive, but there are plenty of disincentives to action that don’t manage to eliminate the action entirely.

      Much depends on cartelization here – that is, if one market participant decides to break the code of bigotry and start hiring minorities, that participant gets the largest possible share of value from the decision. Policing such potential violators becomes very important.

      Hence the origin of Jim Crow laws and also the KKK.

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      • How publicly the code is broken matters too. If a business starts using minority suppliers, or hiring minority workers for non-menial positions, that needn’t be obvious to its customers. If it starts serving minority customers in front of majority customers, that will lead directly to losing some number of the more desirable customers.

        And any of this can also trigger boycotts that require neither violence nor the force of law to be effective. That is, you can’t dismiss all social sanctions as “policing”.

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  5. The argument is that bigotry is unsuccessful in the labor market. If you hire inferior people, you’ll lose money, and ultimately bigotry in the labor market only has an impact if you’re hiring an inferior person of the preferred race over a superior person of another race. Catering to bigots is a completely different thing. If you can find a niche market, you can do fine. Kolohe is correct though that bus drivers and lunchcounter waitresses were obeying the law, laws which were increasingly falling out of favor.

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  6. To Todd: If we were able to perform an experiment that definitively showed that bigotry as a business practice is unprofitable, would you then be OK with getting rid of affirmative action?

    I would ask the other folks similarly if they would support affirmative action if the experiment shows that bigotry is profitable.

    In general, I’m not convinced that this experiment should be the definitive one in determining whether affirmative action is good policy.

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  7. You ignore a critical part of the argument: that the process which makes bigotry unprofitable is not immediate. It’s a gradual and iterative process! That is: Yes, there are social and cultural aspects of race (or gender, religion, sexual identity, whatever) which economically rewards adherents of bigotry. But…and this is key: there are always actors on the margin who will specialize in diversification, for it own sake, because it is (slightly, given the context) more efficient for them to do so. Other actors close to the margin (but not as close as the early adopters) must compete with those actors, and must adopt the same efficient policies, ect…

    So. What you are ignoring is that the argument that bigotry is not profitable is a long-term argument, with “profitability” better defined as ‘sustainable economic suvivability.’ In the short term, yes, cultural and socio-economic biases will rule the day. But the profit motive is a slow, degenerative acid which eats away at those prejudices and replaces them with $$$.

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  8. This is a question I’ve been exploring re: entertainment media.

    If bigotry doesn’t pay, why are so many ethnic groups so underrepresented in media, especially TV, movies, and video games. Ditto for women.

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  9. Dixie Walker was a teammate of Jackie Robinson’s on the 1947 Dodgers, the first integrated major league baseball team. Walker wasn’t happy about that, so he asked for and got a trade to the (still segregated) Pirates. This wasn’t because he was a bigot or a hater, and certainly not because it was in his economic interest to be traded to a less successful and less visible team. It was because he planned to open a hardware store in his home town in Alabama, and was afraid that he’d lose customers if he was thought to be fine about having a black teammate.

    To recap: he wasn’t willing to play with a black man in New York, where it was perfectly legal, because of what he’d face in Alabama for having violated, not its laws, but its customs.

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  10. All this discussion and so far no one mentions Gary Becker’s The Economics of Discrimination?

    The argument that a free market makes discriminators bear a cost — not necessarily a prohibitive cost, but a significant one — originates with him. It’s no mere talking point. There’s a good deal of research behind it.

    Becker’s model has been criticized, of course, but it still explains a great deal about American economic history in this area, including persistent poverty among minorities, the formation of extra-legal organizations to enforce racial segregation norms, and the disproportionate effects of discrimination in different regions of the country.

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  11. Between 2002 and 2005 I had several patients tell me that they liked me as a doctor, but that they wondered if I could get a different (i.e. not AA) nurse. This occurred in a very blue state and was hardly the distant past. I had the luxury to tell them to make sure the door didn’t hit them in the a$$ on the way out, but this might not have been an option in Alabama.

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    • ” but that they wondered if I could get a different (i.e. not AA) nurse.”

      This is an interesting way to phrase what many would describe as normal integration, and it brings up another factor that I don’t think is discussed enough when talking about AA.

      While it’s important to note that AA (I believe) has allowed classes of people to receive opportunities that had been denied previously, it can’t be denied that AA has simultaneously created a vehicle for the casual dismissal of any and all success by those same classes.

      The same website that published Gunnarsson’s essay also published this essay, which is a little hard to read (it rambles fairly incoherently) but presents the (not so uncommon) point of view that there are no actual successful women in business. There are only women who are allowed to be erroneously labelled as successful in a white-collar economy, because affirmative action forces us to pretend they are capable of complex tasks and a stable work ethic when, in fact, they are not. (According to the essay’s author).

      You see this same dynamic with certain critics of the president: that he is a slow-witted simpleton who cannot even speak in coherent sentences without the use of a teleprompter, and that the only reason he has impressive academic degrees, was the president of Harvard Law Review, a US Senator and POTUS is “affirmative action.”

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      • In other words, minorities are damned with AA and damned without. In a world without affirmative action, minorities simply won’t get the jobs regardless of their qualifications. In a world with AA, white racists will simply dismiss their hard work as simply being because of AA.

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      • There is the dynamic that people who look down at the skills/achievements/talents of minorities blame everybody else but the person in the mirror for their own feelings. Sure they don’t want to think all minorities got a free handout and didn’t earn what they have, but really what choice do those people have but to be harshly critical and insulting to minorities. They can’t help feeling that way, liberals made them have all those bad feelings and boy are they pissed about their own feelings which they have and can’t do anything about. Why won’t liberals stop making them have bad feelings by breaking down race or gender based barriers which we pretty much all agree were wrong. Couldn’t liberals just leave well enough alone but just agreeing the barriers were bad and not doing anything about them.

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  12. Well stated Tod. I think if we try to find some logic in Gunnarsson’s argument it would be that by the time you’ve amassed enough popular opinion to make some kind of market bigotry illegal you probably already have the social consensus to make it illegal naturally (i.e. through the market). Basically that laws follow culture and not the other way around. It’s hard for me to believe that de-segregation would have happened just as quickly without the Civil Rights Act, but that does seem to be the non-taboo argument made by anti-CRA libertarians.

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  13. Only in the US are European Spaniards considered to be something other than white. So why European Spaniards are Hispanic in the US and considered historically excluded minorities Arabs from North Africa are considered Whites with full White privilege. How did the US government come up with these classifications?

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    • If I were unscrupulous, I’d have tried to bend my Hispanic heritage during college admissions back in the day. Catalonian on my mother’s side.

      Anyway, when the “No Spanish” sign was up, they were probably not-white the same way that Italians were not-white. Now, unless you’re Latino or well-tanned, the status of people like me is more of a historical oddity. Especially when we’re pale and have Anglo names.

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      • I’m willing to bet a substantial amount that “Spanish” does not mean “European person from Spain” to whoever put up that sign—that would be a Spaniard. “Spanish” most likely means Spanish speaker. The sign is promising—advertising—that patrons would neither see brown faces nor hear a language other than English.

        However, I hear the hoofbeats of a hobbyhorse in the first comment. How “Hispanic” is defined in the U.S. is pretty tangential to the post, isn’t it?

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      • So Blaise, you’re wagering that the person who put the sign up was part of the Spanish-speaking world?

        I’m aware of what Old-World Spanish means in the New World Hispanosphere. I’m doubtful that the sign-poster had “visitors from Barcelona” in mind.

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      • Not only was he part of the culture, he had absorbed enough of its own internal prejudices to know enough to put up “Spanish and Mexicans”, not merely Mexicans. Too bad he didn’t absorb enough of his own White’s [sic] Only language to avoid the Grocer’s Apostrophe, a problem I see around here with indecent frequency among people who should know better.

        The possessive of it is its, not it’s. Hablamos inglés.

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      • Blaise, Mr. Blue, I understand your points and we don’t really seem to disagree. Blaise, maybe I had something different in mind when I doubted the sign-poster was “part of the Spanish-speaking world,” but I can believe he might have been aware of the criollo/mestizo divide in Mexico and elsewhere.

        Older people in the Southwest often use “Spanish” to mean what we’d call Hispanic, especially when they’re trying to be polite.* I’m not talking about whether the sign-poster was trying to specify that Ricardo Montalban was also unwelcome to patronize the establishment in question. My bet was that he most likely didn’t have tourists from Spain in mind when he made the sign. If you think he did, OK. If you want to tell me about what Spanish descent means in Latin America, it’s a conversation, en español, that I’ve been a part of many times, but it’s not what I was talking about.

        * Yes, politeness matters, even to someone racist enough to put up a “Whites Only” sign.

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      • And the Spanish Inquisition, the purging of Muslims in Andalusia, the slaughter in Central America, the occupation of the Netherlands, and all the other horrors were actually run by Republicans?

        When Europeans sailed to the New World, there was a reason they thought the Spanish were a rather terrifying, narrow minded, violent, intolerant group of people.

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      • You do realize that most of the illegal immigrants coming here are fleeing the institutionalized racism in Mexico, don’t you?

        When I meet with upper class Mexicans (who could pass for French or English, since their European blood is untainted, which they’re proud to point out), they talk about the vast gulf that separates them from “Mexicans”, a term they use derisively. But racial derision runs down hill, and Indians aren’t actually at the bottom. Needless to say, the only American political party that went to war to defend race-based hereditary human-slavery jumped right in bed with it, which didn’t really surprise anyone.

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      • George, I’m touched by your concern for the plight of victims of racism south of the Rio Grande, and my heart aches to hear of the rank bigotry you’ve encountered among the Mexican upper crust. I’ve met many upper-class Mexicans as well—in fact, I’ve even met upper-class Americans who could pass for Frenchmen, and I’m with you, George—some of those people hold really ugly attitudes toward their fellow citizens.

        I’ve also met upper-class Mexicans, Americans, etc., who didn’t seem like that at all at first, but then once I started lecturing them about the institutionalized racism of their society, they started getting all huffy.

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      • Well, I too have met all too many upper class Americans who could pass for Frenchmen, and it was often a shameful sight. Cheese-eating surrender monkeys who couldn’t escape from an imaginary box.

        However, Hispanic racism is in a class by itself. Mass torture, genocide, forced conversion, followed by the creation of governmental systems whose sole driving thought was keeping one race, and class, on top and all others on the bottom.

        That’s why they still use common terms to describe the amount of Spanish versus Indian blood. Of course, in part the system makes sense, because the Aztecs were conducting mass executions by carving out the beating hearts of weaker tribes, but the Spaniards showed them who was boss by making the Aztecs realize they were just inept pussies when it came to brutality.

        North American Indians were certainly up there, but not as numerous, organized, or beset with bizarre religious conviction about how the sun would go out if you didn’t feed it enough human blood.

        The racism is so pervasive that even where I live, when you walk into a Mexican restaurant, the guy who looks Italian obviously owns it (even though he doesn’t have a drop of Italian blood), the really hot Mayan looking girl probably has a status that I don’t possibly want to know of, based on her submissive yet very angry demeanor. In a hierarchical system, there is a hierarchy.

        There is something most that most are escaping from, and that is being told who to vote for (or they’ll be fired), the forced support of a ruling elite who pretends to speak on their behalf (or they’ll be fired), and promises of economic improvement – any year now – until the idea of anything but high unemployment rates is a joke.

        I’m sure they’re feeling more and more at home here.

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      • George, you’ve fashioned your fury at/fascination with racism in Hispanic society into an odd little weapon, but I’m not sure why you’re waving it at me. We could go back and forth all day about whether I had complicated-but-sound business reasons to have, on occasion, pretended to be Mexican, but in fact, I’m not. I’m from out of town. So, I am not in a position to be offended by nor do anything about the problem that’s got you so worked up.

        I do apologize if I came across as snide with the comment about your signature “so-and-so are the real racists!” artistry. I meant it sincerely—you always come at it from the most brilliantly unexpected angles.

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  14. Nearly everyone in America is a psuedo-libertarian. The only ones who aren’t would be the real Libertarians. Glenn Beck, Sean Hannity and Rush Limbaugh are conservatives who know that “real Libertarians” are easily manipulated if you use the right language.

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  15. Didn’t someone observe that the businesses in DC offered benefits to the partners of their married gay employees even while the federal government refused to recognise the gay marriages of federal workers as valid?

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  16. We have fairly recent proof of this (without the “gun to the face” need for jackboots). Chik-Fil-A made know their policies of discriminating against gays, and opposition to SSM. They were handsomely rewarded for their bigoted stance.

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      • While on a corporate level Chick-fil-a is officially non-bigoted, the individual franchises regularly carry out bigoted actions. The Corporation denies any responsibility, and yet they actively seek out franchisees that share the Conservative Christian beliefs of their founder.

        Chick-Fil-A restaurant have turned away gay customers, put up homophobic posters, harassed and fire gay employees, non-Christians, and women. In one instance, a woman was fired and her spot given to a man because the franchise owner thought she needed more time to attend to her husband and sons.

        “Hey, it wasn’t us, it was just a crazy franchisee” stops being an excuse after a several dozen similar incidents.

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      • Alan,
        I think, then that we say that Chik-Fil-A is a subset of Tod’s group 1, with a caveat:
        Prejudice is near-universal and socially sanctioned amongst the population they serve. Markets will actively reinforce discrimination in this situation.

        A lot of my friends said at the time, “I’d boycott Chik-Fil-A, but I don’t eat there anyway.” The restaurant’s prejudice was not socially sanctioned by the public at large, but was socially sanctioned by enough the their clientele and potential clientele to make the boycott ineffective.

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      • IIRC, their PR people were apologizing and saying that the company doesn’t truck with descrimination, but at the same time, the Owner stood up and said that he didn’t need gay customers and that the restaurant was doing better than ever since the controversy erupted.

        My impression is that overall the boycott failed in the short term–They didn’t have a particularly large customer base in the first place, so the folks they lost were more than made up for with the free-advertising call to arms for the third of the country that still despises gay people. But I don’t know how many people mantained their boycott or buycott once the hubbub died down. And they lost a bunch locations when colleges declined to renew contracts for on-campus sites.

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  17. If there is a desire for a certain type of thing and that desire is expressed by consumer preferences/choices, then that thing will find a market. I mean, a market is just the place where buyers meet sellers, no? If people want to buy bigotry, the logic of the market requires that someone will sell it.

    Excellent post Tod.

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    • Thinking about this a bit more, I want to add that this comment

      “In a free market, bigotry doesn’t pay. If for instance an entrepreneur [was] a true misogynist and didn’t want to hire women, no matter how qualified they are, then he is passing up opportunities for making profit. His competitors who do hire women will do better than him, making it difficult for him to keep up. If he doesn’t relent, his market share will decrease and eventually he may go out of business.”

      assumes that employees won’t take a lower compensation package to work for a bigoted firm; that consumers won’t pay more money for products made from a bigoted firm. It presumes two things. 1) that monetary value will be valued more highly than personal value by employees and consumers (and doesn’t that sentence alone reveal an ambiguity in the term “value” as it’s often used?). 2) That there is a distinction between inherent and expressive bigotry. Is it possible for an entreprenneur to merely act like a bigot in order to make money in a market? And furthermore, if he’s an inherent bigot, why would a libertarian conclude that “the market” will select against him except by assuming a certain value scheme (one that’s being begged in any event)?

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      • They sell chicken. The owner also contributes to groups defending conventional matrimonial law. In the eyes of the vulgarians, that is ‘bigotry’ and what followed were various instances of petty harassment, among them threats from a Chicago alderman. Of course some member of the public made solidaristic gestures. That was the decent thing to do.

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      • In the eyes of the vulgarians, that is ‘bigotry’

        Art:

        If people find something to be offensive and bigoted, that does not automatically make them “vulgarians”, if they have reasons to believe it bigoted.

        And while it’s the case that some supporters of ‘traditional’ marriage aren’t bigoted, it’s also the case that some of them are bigoted, against gay people (unless of course you want to assert that it is impossible to be bigoted against gay people.)

        So one can make the case that a particular supporter of ‘traditional’ marriage is bigoted, without being a vulgarian.

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    • Tod,

      I agree. Excellent post (and stimulating comments, Stillwater)

      There are a lot of ways which markets will work to undermine illogical biases. I do agree though that if customers want their biases served the markets will try to deliver them. If some people want to be served by a green waiter, then some restaurant will try to make a profit by delivering them.

      Even worse, if some people want to only frequent establishments which actively discriminate against green people, then someone will be incentivized to deliver it. The anti green diner.

      The question then becomes what are the longer term dynamics of the system. What kind of pressure can anti-anti greens put by boycotting or taking their business elsewhere? Remember, for democracy to work we have to assume a majority agree that anti green business practices are wrong.

      In summary, there are ways in which free markets will reinforce racism. There are ways that they will undermine them. Great way to get us to think about the interplay.

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      • In summary, there are ways in which free markets will reinforce racism. There are ways that they will undermine them.

        Roger, markets don’t do anything. At best, markets allow the expression of individual values and are by definition silent on the content of those values. (The idea that markets are also actors – that they can “reinforce” certain types of behaviors – is very strange to me. Perhaps you mispoke?)

        If some individuals think the expression of certain types of values and desires are harmful or ought to be limited, then restrictions are imposed on individuals (not markets!) incentivizing one type of behavior over another.

        And per your question from the other day, do our differing views on this constitute a disagreement between us? Or do they reduce a wildly inaccurate ideologically-motivated confusion?

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      • , if communitarians like Michael Sandel are to be believed, free market political economies loosen the bounds of community and tribe and unmoor people from their social milieu. I.e. if capitalism creates a consumeristic* society, at least consemurists are less likely to care about the race of the person they work with and care more about their gadgets etc.

        When people are prepared to sacrifice profit for community norms, they are more likely to sustain cartel-like behaviour which keeps victims of systematic discrimination from participating in the economy. The problem of state-less coordination cuts both ways. On the one hand if it is impossible, then absent formal controls, systematic discrimination is less likely. But the possibility of a stable and state free civil society/commons is also diminished. On the other hand, when people are able to sacrifice personal profit in order to maintain community norms, that can engender systematic racism of a particularly pernicious kind which libertarians should care about as well.

        On a more positive note, I remember a paper where it was found that as societies marketise, the way in which they play ultimatum games changes as well. Their offers tend toward 50:50 splits rather than more radical 20:80 or 80:20. i.e. fairness and reciprocity seem built into the logic of market societies. Perhaps the practice of exchanging stuff and the variety of things which you can exchange money for gets people internalise the idea of fair value or fair exchange.

        *of course this is supposed to be a communitarian criticism. But I wonder if left wing communitarians appreciate the tension between small scale tightly knit communities and the community based norms and pluralistic societies. Pluralistic societies, I think, kind of need some social distance such that people are prepared to be impartial often enough. tight communities require the kind of partiality that can and has historically expressed itself in terms of systematic informal racism and other bigotry.

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      • SW,
        Minor quibble. Markets are institutions. Institutions are rules and roles which humans use to coordinate their behavior. Institutions can reinforce or undermine behavior without themselves being actors. They do so by affecting the choices, incentives and expectations of actors.

        So yes, institutions DO, do something, indeed they do a lot. In this case they can be shown to both undermine racism and in some cases play to it.

        Democracy, politics, law and enforcement are institutions too, and also can both support and undermine racism.

        And BTW, institutions are not necessarily even designed by actors. They can often evolve through the actions of millions over time.

        On the other subject… I value your feedback and critiques and continue to gain from them even when I do not fully agree.

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      • Roger,
        I sometimes think that certain liberals dislike markets as an institution simply because they dislike trying to predict emergent behavior.

        For folks that can predict (to a reasonable extent) markets, they become yet another tool in the quiver.

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      • In the tight-knit communities, say of startups or small towns, where the founders endured loads of hardships, ties are binding. Small towns are where everyone knows far too much about each other, both for better and worse. I used to joke, when I lived in Augusta, one of the biggest laughs I ever got in the Buddha Bar was when I said “If your great grandfather didn’t shit in an outhouse in this county, you’re a newcomer.” It’s hard to gain entry into such societies. They don’t mean to discriminate, they just do. Either you’re a newcomer or you’re not.

        Big Cities are full of refugees from small towns. Cities are obviously more pluralistic, though not all are as pluralistic as they’d like to believe. Big Cities are more like Small Towns than might be supposed, or at least the cities I know well. Big Cities are composed of small neighbourhoods, where you do see the same people along the counter eating breakfast at your local restaurant. You do see the same people on the same city bus every day. It’s just easier to be a misfit in a big city because money can buy pretty much anything worth having in a city, including social ties. Watch the people swanning around at the Metropolitan Opera.

        Perhaps Mandel is right, insofar as capitalism unmoors people from their social milieu. I’d say being able to afford to live on Park Avenue in NYC would unmoor anyone. Money gives people choices but society is the only support the poor may have. Lots of interdependency within poverty, as complex as anything created by wealth. People who’ve been through the hard times do retain some sense of place, however wealthy they become. We’re a social species, very few people live alone. If Mandel’s right about anything, it’s that we’re constantly peeking through the Veil of Ignorance. It may not exist at all.

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      • Chris,

        To the extent that markets undermine existing class and power relationships, markets also undermine racism by empowering people.

        Again we are back to the question of which institutions have the best empirical record based upon the values of those affected. A strong case can be made for liberal democracies using some combo of free markets and state intervention. The balance between the two is a matter of dispute. What isn’t usually under dispute is that mercantilism, feudalism, slave-based and socialism are dysfunctional according to the standards of people living under them. Right?

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      • Murali,

        “…communitarians like Michael Sandel are to be believed, free market political economies loosen the bounds of community and tribe and unmoor people from their social milieu.”

        I just finished reading the Rule of the Clan by Mark Weiner. A stimulating narrative exploring the dangers of romantic communitarian/tribal nostalgia (as well as anarchism).

        In my terms, Weiner’s argument is that absent proper institutions, including a liberal state, that humans naturally tend to form honor-based kinship clans which provide security and a place in the world, but do so at the expense of individualism, freedom, democracy, prosperity and universal values. The darkest side of clans is that they are prone to spiralling feuds and wars of tribes against tribes.

        I would recommend all libertarians, anarchists and/or classical liberals get this book. I don’t completely agree, but I am better for having read it.

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      • My takeaway is that this points out that most of us have competing and contradictory aims for the society we want to live in.
        We want to live in a community where we are nurtured, honored, and which has concern for our wellbeing.
        On the other hand, that same sort of community is often suffocating, illiberal, and painfully conformist.

        So we want individual liberty to pursue our own private goals and aspirations, free of restriction.
        On the other hand, that same freedom is often empty, drained of connection and meaning and kinship.

        This is why I am so skeptical of schemes that present injustice as simply the work of external agents.

        In the example cited by this thread, people are essentially perfect, and injustice is only the result of jackbooted state. In this telling, if the apparatus of state control were to be lifted, racism would vanish.

        Of course, the left has its own version- just replace “The State” with “The 1%” and the argument is the same.

        Its not that external agents are nonexistant or innocent; its just that I think they owe their existance to our own internal contradictions and weaknesses.

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  18. Marcus Garvey wanted Black America to do as every other immigrant group had done: band together and form their own economic and political calculus of power — force, mass, acceleration, etc. The Irish had done it, many other groups did it, many continue to do it. Discrimination does pay well, mostly because it’s discriminating for something instead of against something else.

    We all understand people like ourselves, find all sorts of commonalities with them. Good Old Boys networks don’t really keep people out so much as they keep them in. I generally approve of Affirmative Action but I wish there was more Marcus Garvey than MLK Jr. in the mix. Why shouldn’t people with common cause band together in their own interests, especially if they’re unjustly discriminated against as a group?

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      • WEB DuBois never quite got the effing point. Look, there have always been two schools of thought on Discrimination in this country. The first wrings its hands and earnestly wishes everyone could just get along. They bloody well won’t so don’t let’s start up that whinging.

        The other, more pragmatic voice says nobody will help us but ourselves. Let us commence upon that premise, for we cannot rely on the good faith of others. The Irish, famous whiners throughout their long history, didn’t do much lamenting over their fate in Immigrant America. They mobbed up, got politicians elected and proceeded to instill the Fear of Consequences into their enemies.

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      • Given that Dubois actively opposed the Booker T. Washington school of “can’t we all just get along,” I find this analysis… devoid of relevance, much less nuance or historical accuracy.

        Anyway, as much as I’d enjoy getting into another conversation with he who can’t be wrong, I’m goin’ back to making the page bleed. Have fun, enjoy Dubois’ article. It’s really biting.

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      • Neither DuBois nor Marcus Garvey made any headway against institutionalised racism in the USA. DuBois was a petty little man, much given to the New Orleans style sorting-out which pitted one black person against another. Given that fact, I merely use Garvey as a placeholder for the entirely sensible notion which says black people could (and have) make their own culture viable on the basis of what they have in common, economic and political considerations, not the usual liberal windbaggery which demands we make a place at the table for everyone. Want a place at the table? Make your own table — oh, and furnish it with something worth taking a seat at that table.

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      • Virtually everyone who wasn’t a member or believer in the UNIA thought that way of Garvey. He was seen as a hero, globally, and a joke (though a dangerous one) just as globally, with all his pageantry and paranoia. His message of pan-Africanism and black unity and solidarity are ones that I can appreciate — I’m a Malcolm fan myself, and I’m prone to appreciating and even admiring Newton, for all his flaws — but Garveyism was a failure in Harlem as much as it was a failure in South Africa and the Caribbean, because, as you note, institutional racism was so pervasive, and so pervasively economic, that unlike most immigrant groups — including the Irish, Italians, Greeks, Eastern Europeans, even (though with certain unique institutional barriers) the Jewish — they were not only bullied out of markets, but they didn’t even have access to the economic infrastructure that is necessary in order to produce a self-sustaining economy. At that time, there were really only two choices, complete separatism (an option Garvey sometimes promoted, with the Black Star Line for example) or a slow push to full integration. Garveyism was too in between to get anywhere in the end. It was inspiring, of course, and continues to be, and that’s important, but for change to happen someone has to go out and agitate enough to make peopl eapy attention. This is why one Dr. King is worth a hundred Garveys: he didn’t just stand on a corner in Harvard preaching, and he wasn’t interested in taking ceremonial titles in Africa. He was on the street disrupting the system until change happened, and he was even more inspiring to boot.

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      • Marcus Garvey had many enemies, mostly within his own society, a point I’ve made repeatedly, not that it seems to have made any impact. You buy into the rhetoric of Garvey’s enemies and I don’t, fair enough. I’ve already said Garvey failed.

        But for all the recent rhetoric and grandstanding on the 50th anniversary of MLK’s famous speech and the turning of MLK from plaster saint into one made of more durable Chinese granite, (quarried in dubiously un-King-like working conditions) it’s perfectly obvious Dr. King’s vision has failed. America is more segregated than ever. If American black culture has advanced over time, it was deeds, not words, which pushed it along. The King family and my family go back many years together. This nation has made a martyr of Dr. King and has otherwise ignored him. It seems fitting Dr. King, and now President Obama, should speak from the Lincoln Memorial. Lincoln was another such Heroic Martyr, for his words outshone his deeds.

        The topic at hand is Does Bigotry Pay in a Free Society. It does pay. When the bigots walk past profits they might otherwise have made, the victims of such bigotry ought to make those profits by banding together and using their collective powers, both political and economic. Such powers are the only route to change. We can percolate that much goodness from Garveyism. The same is not true of Dr. King or the Do Gooders, who are all words and no deeds.

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      • point I’ve made repeatedly, not that it seems to have made any impact

        Nope, you haven’t made it once here. But we mean different things by the word “differently,” with your meaning corresponding to my “never.”

        You wrote this:

        but I wish there was more Marcus Garvey than MLK Jr. in the mix

        And I’m simply pointing out that there is no sense in which that wish is not absurd. But look, here I am arguing with the bitter old man who cannot be wrong, exactly like I said I wouldn’t. I’ll let you get back to puffing out your feathers like a grackle in spring. Have fun.

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      • Pilpul won’t save your argument, Chris. Garvey failed. Dr. King failed.

        Berry Gordy succeeded. Joe Robinson (with the help of a young Spike Lee) succeeded. Jay-Z succeeded. FUBU succeeded. For Us, By Us. Where black culture has stepped up and produced good things, people everywhere have bought into the vision. And where there is no vision the people perish. Garvey had just such a vision. If it didn’t pan out in his time, it panned out for others. Black identity has translated into billions of dollars of profit for some people. Might add in passing, just try to find a complete copy of the “I Have a Dream” speech online. You’ll have some trouble there. The King family owns the copyright and will gladly sell you a copy — it’s for sale on Amazon.

        I purposely said “more Marcus Garvey and less MLK” because that’s what I’ve seen. You don’t like my bitterness? I’m not bitter. I remember. When you’re older, you’ll remember, too. And you’ll smile at earnest young people such as yourself, who will attempt to tell you some second-hand story you remember at first hand.

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      • Blaise, if you ever wonder why I have been making quips about you being incapable of being wrong, consider this. You wrote:

        Might add in passing, just try to find a complete copy of the “I Have a Dream” speech online. You’ll have some trouble there.

        To which I responded with a complete version of the speech obtained from the first link in the Google search for “I have a dream speech,” to which you respond not by saying, “I stand corrected,” but by, apparently, disagreeing with the existence of the link itself? This is why there’s absolutely no point in having a discussion with you. You’re going to preach, lecture, and presume to teach, but you ain’t going to discuss or debate, because those things require admitting that you are fallible, and that you’re merely saying something is true does not make it so.

        Anyway, this will be my last reply (I promise this time!). Au revoir.

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      • I don’t wonder about you, Chris. That’s a consistent problem with the narcissist, that he believes people wonder about what motivates him. You really don’t matter, Chris, at least to me you don’t. Trust me on that. I say what I want, to whom I want, in the way I want. You are free to do likewise, in all respects.

        Tod Kelly observes we continue to fall back on sophomoric platitudes that serve little purpose save allowing us to feel better about ourselves. An excellent point, one you should take to heart for if ever there was an utterer of platitudes and sophomoric, purposeless feelin’ good going on around here, you are that utterer. Now stay off my back.

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      • Not really. Here’s why: let’s suppose a group of like-minded people, say Koreans, created ad-hoc banks to fund each other’s enterprises. In Korean, such arrangements are called kye loans. The Irish have constructed such schemes, the Chinese do it, many other successful cultures have done so.

        The history of the Irish in the USA is full of the most awful prejudice. The Irish came to the USA in two waves, the “Scots-Irish”, the Ulster Irish. Then came the “Black Irish”, the Catholics driven out by the Potato Famine. I simplify to the point of error but these are the basic facts: the Scots-Irish were the worst enemies the Black Irish ever had. Worse than the rest of the Americans. Many of the Black Irish came as indentured servants.

        But the Irish mobbed up and fought back against institutional prejudice. I contend every such culture ought to do the same if they’re to get ahead. It’s not about trade barriers. At its core, it’s about access to capital and talent.

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      • But past a certain threshold, creating a racial coalition limits access to capital and talent.

        If blacks shopped only at black-owned stores and whites shopped only at white-owned stores and asians shopped only at asian-owned stores, that means less competition-less capitalistic innovation. If the Irish own all the florist shops and the polish own all the hairdressers, then the polish dude with a green thumb is probably wasting his talents cutting hair, when he could be making more money and providing more productive labor if he was working for the polish florist.

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      • Beyond a numinous and ill-defined threshold, any good thing becomes a bad thing, I suppose. Marcus Garvey’s point was this: “There shall be no solution to this race problem until you, yourselves, strike the blow for liberty.”

        Liberty isn’t going to spring up from the earth like the dandelions in spring. Liberty is a hard-won prize which demands re-winning, every day. Asian stores cater to Asian needs but they’re perfectly willing to take my money for their goods. But if that Asian grocer gets his capital from a kye in preference to a regular bank because some White Boy knucklehead loan officer doesn’t understand that situation, hey, that grocer and his friends formed up their own ad-hoc capital formation structure and will keep their profits under their own roof.

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  19. Some version of this talking point seems to be gaining a pretty firm toehold with consumers of electronic media, and because of this I’m going to take a moment to push back by stating the obvious: In free markets, bigotry actually does pay – a lot. In fact, it is primarily the economic rewards of bigotry that make it so deeply ingrained and damned pernicious. Take a look, for example, at the most clichéd examples of business-based bigotry in our own country’s recent history:

    You need to sort out in your mind to notions: 1. that someone in commerce can survive or even thrive while undertaking practices which are at least superficially self-injurious and 2. that it actually benefits a merchant to do this.

    The thing is, people often make decisions that are not strictly optimal, in part because of the hassle of collecting the necessary information. One economic geography text I consulted put it thus: actors making locational decisions are satisficing, not optimizing. I encountered two good examples of this ca. 1990 regarding hiring decisions. One was by the manager of a temp agency who told me that any resume longer than one page went in the trash; she would not even read the first page. Another was by the supervisor of a hotel desk who was telling an assistant that any applicant with some time put in at college she did not consider; they are short-termers and would just leave at inconvenient times. And, of course, when you’ve a job open it can be difficult to discern who applying is the better candidate; committees will default to whichever the more vocal members ‘like’.

    With regard to hiring decisions, a company injures itself when it elects to forego someone with utile skills. The reason to do that (apart from an a priori dislike) would be that it would sit ill with the rest of your workforce to hire that person and cause you productivity problems due to injured morale and turnover. That, of course, depends on the properties of your workforce. (And keep in mind, you are adjudicating in your mind between potential pitfalls).

    With regard to commercial establishments, your calculation would be with regard to the net effect on your total revenue. In a certain sort of locale, unrestricted custom places people in proximity with each other when at least one party would rather be isolated; alternatively, it may damage the merchant’s brand. The benefit would be in establishing the brand.

    Where making decisions due to ascribed traits probably injures least is in transactions between firms, both of which keep journals and ledgers in the impersonal language of accounting.

    ==

    Keep in mind, all this babble about ‘bigotry’ incorporates the idea that members of the bar make better judgments – ethical and practical – than businessmen who actually pay the costs and reap the benefits. That is not reasonable.

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  20. Your argument conflates discrimination with bigotry. I’m arguing that bigotry doesn’t pay, not that discrimination doesn’t pay. Discrimination is necessary and beneficial. For example, a reasonable employer will discriminate possible employees based on how educated they are. Nothing wrong with that obviously.

    There are some categories of discrimination which are deemed socially unacceptable in our current Western culture. One of them is race. There are different possible motivations for discriminating on the basis of race. One of them is bigotry. Let’s say Alice owns a small business and she hates black people and does not want to hire them, or sell her services to them. Alice is a bigot.

    Now let’s consider another small business owner called Bob. He is not a racist. He’s willing to sell to blacks and buy from them just as long as it’s in his best economic interest to do so. If not dealing with blacks is more profitable, he will discriminate against them. But he’s not a bigot, merely a regular self-interested individual.

    If conditions are such that most customers hate blacks and don’t want to patronize a restaurant, shop, or other business that serves black people, then both Alice and Bob will discriminate against blacks. If, on the other hand, racists are a minority, then Alice’s bigotry-driven discrimination will cause her to lose customers, whereas Bob will welcome everyone regardless of race and do better.

    Thus, bigotry is at best (or at worst) neutral in regard to profit on the free market. In most cases, being led by bigotry rather than economic interest leads to worse results. Bigotry doesn’t pay on the free market. I never made the claim that it always pays not to be bigoted. Businesses generally provide what consumers want. Those who deviate from this will see their sales decline.

    It should also be noted that in a society where most people are racists, the government will be very unlikely to pass laws against racial discrimination. The free market solution has the further advantage that you don’t need a majority of the population to get what you want. Even if just a minority – let’s say 20% – of the population prefers racially integrated businesses over segregated ones, there will be some businesses which do not discriminate on the basis of race because that’s what their customers want.

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