Thursday, July 08, 2010

Letter to the Editor

A letter to the Editor, shared by KPC friend Douglas Coate:

The roots of Rand Paul's opposition to the 1964 Civil Rights Act as applied to private employers run deep. In English history, back to the Anglos and the Saxons, the Magna Carta, and the common law. In Western civilization the roots run longer, through Roman law, the Babylonian codes, and to the early traders in Mesopotamia. There has always been tension between citizen traders on the one hand and the
state on the other. Merchants have tried to enhance and preserve their wealth by gaining rights to property, contract, and trade, while states have too often tried to expropriate it by denying these rights. The great accomplishments of Western civilization, and now Eastern civilization, have resulted from the spread of these rights and the flowering of trade, cooperation, and specialization.

Fair employment laws or anti discrimination laws are the latest attempt by the state to take wealth from those that create it. By changing the hiring, firing, pay, and promotion decisions of private firms from their profit maximizing levels the state can redistribute wealth to favored groups. But not without consequences. Targeted
firms will have higher costs, some will be driven from business, and all will try to sell their goods at higher prices. Trade, cooperation, specialization, and wages and living standards will suffer.

Private firms if left alone do not discriminate. They hire the best workers they can at prevailing wages. Not to do so would increase their costs, lower their profits, and threaten their existence. Workers themselves become the ultimate arbiters of employer fairness in a market economy, for they can leave one employer for another without notice.

So, what did Rand Paul do wrong? He caved! If he had stuck to his position, he would have at least made people think.


Anonymous said...

"Private firms if left alone do not discriminate"

Sympathetic though I am to liberalism, I have to chuckle when I read sentences like this. It's the sort of claim that makes people not take liberals seriously. (Rand Paul a case in point.) The reason is that it is a manifest empirical falsehood. Consider decades of Jim Crow laws and "Blacks need not apply" advertisements in the South. Say what you want about the distortionary effects of government efforts to FIX the problem, but to deny the existence of a problem is really bizarre.

Sean said...

Anon--times were a bit different during Jim Crow, no? How would you expect the public to react if wall-mart came out with such a sign today?
On the other hand, the Dodgers management could have been extreme racists but would have still benefited from hiring Jackie Robinson.
I've heard a good question that comes at this issue from another angle:
Does a black business-owner have the right to refuse business to a white supremacist?; or does a Holocaust survivor have the right to refuse business to a neo-Nazi wearing a "Heil Hitler" T-shirt?

Anonymous said...

I think that's more than a different angle... it's a different issue. My claim is not about what people have a right to do. It is about the truth value of the statement, "Private firms if left alone do not discriminate." I think it is low. About rights and remedies, I make no claim.

Is discrimination less prevalent today than in the past? I'll buy that. But to convince me market forces are sufficient to prevent it AT ALL will be a bit more difficult. Is there a "price" a la Becker? Sure, but it's a price that some will pay. And to claim that it does not occur will damage one's credibility.

Anonymous said...

How are Jim Crow *LAWS* an example of *FIRMS* discriminating?

The key is that in the long-run firms do not discriminate. The firms that innovate by hiring [initially] cheap minority labor will drive out the firms that don't. Also notable is the potential reduction in white resentment which might have occurred had the firms chosen to hire minorities on their own as opposed to being forced into it.

Of course you could argue that in the long-run we (er the former slaves) are all dead.

Mungowitz said...

I was going to say what BR already said. Jim Crow was government sponsored apartheid.

And, I think that Ron Paul is WRONG, at least about this. I'm just claiming that the worst thing to do was to make a point, and then run away squealing. If he believes this view, he should defend it.

Tom said...

Anon is quite correct -- Mr. Coates's simple statement, taken out of context, is patently false: "Private firms if left alone do not discriminate." I say "patently," not "empirically," because no first has ever been left alone (not interfered with by a government). But, OF COURSE, the directors of businesses make mistakes. The point needing to be made is more complex. Here's an improved, but still not quite fully correct version: "In any society sufficiently ethically aware to make and enforce anti-discrimination laws, it is a costly business error to engage in discrimination, even in the absence of the anti-discrimination laws."

The "not quite right" part here involves the definition of "discrimination." Law makers tend to be rigid, where they're not impossibly vague and much is left to prosecutors (sometimes to juries) about what is and is not discrimination. As Sean pointed out, some discrimination is good. And some is good enough for the society it is in, even though some more enlightened society might find it invidious.

The unfortunate effect of Mr. Coates's poorly worded statement is that it has focused us on the wrong question. The question seems to be "what social mechanisms produce perfectly ethical businesses?" When that question is explicitly stated, it's obviously stupid. Government can't do it and the market can't do it. Ever. The question should be "what social mechanisms can best push businesses toward our society's ethical standards while minimizing harmful side effects?" There is a near universal tendency to compare the Market with Perfection, while giving Government a pass.

Sean said...

Mungo--Rand Paul, not Ron. Rand seems much more of a politician (in the bad way)

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