Libertarianism: What Everyone Needs to Know by Jason Brennan

Author:Jason Brennan [Jason Brennan]
Language: eng
Format: epub
Publisher: Oxford University Press
Published: 2012-09-14T04:00:00+00:00

60. Why do libertarians say that the market punishes discrimination?

Nobel laureate economist Gary Becker argues that the market tends to eliminate discrimination. Suppose people have a “taste for discrimination”—they prefer to hire whites instead of equally qualified blacks. This will tend to reduce blacks’ wages. However, this gives firms willing to hire blacks an advantage. Black labor becomes a bargain. Firms can hire blacks at a lower rate, sell their products for less (because their labor costs are lower), and make higher profits.

The market punishes taste discrimination because it makes discrimination come at the expense of people’s other selfish interests. We can imagine a society in which people would not be willing to hire or buy products from blacks under any circumstances, even to save money or to make extraordinary profits. Yet few people are really like that.

Becker’s argument is not mere speculation. Economist Linda Gorman says South Africa provides a good test case. In the early 1900s, despite threats of violence and legal sanctions, white mine owners fired highly paid white workers in order to hire lower-paid blacks. The South African government created apartheid laws to stop them from hiring blacks.

Or, take Jim Crow laws. The economist Jennifer Roback says the economics of the streetcar business weighed heavily against providing separate compartments. Streetcar companies lost money and profits under Jim Crow. They had a history of actively resisting and campaigning against segregation. Southerners often accused anti-segregation politicians of being in streetcar companies’ pockets.

Roback adds that the Southern states had a wide range of laws designed to stop blacks from competing for work. Enticement laws forbade white farm owners from trying to hire black farm workers away from other farmers during the planting or harvesting season. Black farm workers who tried to leave their jobs for higher-paying jobs could be thrown in jail. Vagrancy laws required blacks to be employed at all times. Any unemployed black man was considered a vagrant and could be put on a chain gang. Thus, blacks could not search for better employment; they had to stick with whatever job they had. Emigrant-agent laws forbade white recruiters from enticing laborers to leave their current cities or states to take jobs elsewhere. These and other laws and regulations were created to stop the market from helping blacks.

Jim Crow was expensive. Train companies lost money by having to run extra train cars. Lunch counters lost money by having to supply twice as many bathrooms.

Southern states required private companies to mistreat blacks. The laws were there because many businesses did not discriminate until forced to do so. If you read old newspaper editorials from the Southern states under Jim Crow, you’ll frequently find editors complaining that greedy businessmen just chase the dollar and are unwilling to uphold the moral ideal of segregation.

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