Could The Free Market Have Ended Racism?

There was a bit of a shuffle over the comments of Rand Paul (Republican candidate for Senate in Kentucky) and John Stossel (media commentator, now on Fox) regarding the Civil Rights Act.  Rand Paul came out in favor of allowing private businesses to discriminate on the basis of race (only private businesses; he favored continuing to require government to behave in a non-discriminatory manner).  John Stossel then came to Paul’s defense in the this particular case, arguing that ‘The free market, as usual, will address the problem.  It punishes racists.  A business that doesn’t hire blacks will lose customers and good employees.  It will atrophy while its more inclusive competitors thrive.’

Stossel raises an interesting point: could the free market have ended discrimination without government intervention?  Or were the government actions like the Civil Rights Act and its prohibitions on employment discrimination a needed remedy to the segregation era?

(As an aside, Paul has said that he supports nine of the ten total titles in the Civil Rights Act while opposing one of them.  A perusal of the titles of said act seems to indicate that the one that gives him trouble is Title II, which prohibits ‘discrimination in hotels, motels, restaurants, theaters, and all other public accommodations engaged in interstate commerce’; being the only title in the act that affects privately owned businesses, that would seem to be the part of the bill in question.)

The Free Market Alternative

First, a few words to defend Mssrs. Paul and Stossel: they do raise a decent point.  Assuming all other things being equal, businesses that voluntarily restrict their clientele will find themselves at a disadvantage economically.  In business, the only color that really matters is green (money, that is), and refusing to accept the money of a certain group on the basis of skin color is a poor business decision, putting you at a disadvantage to your competitors.

Civil Rights Act

Let’s have an example.  We have two diners in a particular town, White’s and Gray’s.  White’s only serves Caucasians, while Gray’s serves any race.  Let’s say further that the area where these two competing diners are located has a population that is 90% white and 10% black.  White’s, by voluntarily restricting the type of people they allow to be served there, should receive less money than Gray’s, which will get all of the black diner patrons as well as a sizable portion of the white patrons.  (To say nothing of ALL the white diner patrons who, like Paul and Stossel, personally oppose discrimination and would not support a restaurant that discriminates against other races.)  All other things being equal, Gray’s will get more business, take in more money, and prosper, while White’s will sputter along, and eventually fade away.  The free market has done its job again.

The Reality of the World

In the real world, things aren’t quite that simple; there are many ways that White’s (or any businesses that opt to discriminate) could prove successful, even without black (or other minority) patrons.  For example, let’s suppose that a sizable portion of the population opposes integration (certainly reasonable in some areas of the country, even now; back when the Civil Rights Act was passed, that was rule, not the exception, in large parts of the country).  This group visits White’s exclusively, providing them with a dedicated, committed clientele who help to keep White’s in the black, even without any minority patronage.

There are also other ways to discriminate, of course, besides refusal of service.  A business that served black patrons, but charged them a higher price (or simply forced them to sit in a particular area, much as diners in the Jim Crow era kept black patrons from sitting at the counter) would enable a business such as White’s to have its money and discriminate, too.  Think of Rosa Parks on the bus; while charging her the same amount as the white passengers, the bus driver (and the bus company that set the policy the driver was following) was doing his best to provide her with inferior service.

None of this discussion so far even gets into the fact of employment.  If companies are able to hire only whites for their businesses, or to pay black employees less than white ones (both possible if we take a strictly hands off policy when it comes to any business owned privately), we can end up in a situation where black (and other minority) workers are less well off than whites, have less opportunity to use work as a way of building up wealth for themselves, and less chance to help their children get ahead, helping to perpetuate the cycle for another generation.

The Conclusion

It’d be nice to live in a world where discrimination is a relic of a by-gone era, where everyone looks back on racism as a completely and wholly alien idea, where discussions over repealing civil rights laws are purely academic.  Alas, we’re not there yet (although, I like to think that we’re getting closer); there are segments of the society, in some places powerful and influential segments, who want to use economic and legal means to keep the people they dislike from attaining power, on the basis of race, creed, gender, or some other personal trait.

Listen, Rand Paul and John Stossel, I understand the desire to get government off your back; nobody wants to be looking over their shoulder constantly, worrying that the government will levy huge fines or shut down their business because they missed a hiring quota or were otherwise unfairly judged to be discriminatory.  But the problem is that without that fear of government intervention, there’s a sizable number of businesses, particularly small businesses, that would have no problem discriminating against minorities in hiring and service.

We as a society have decided that laws like the Civil Rights Act should exist, in spite of any infringement on individual rights that might result.  Perhaps Mssrs. Paul and Stossel are correct, and we’ve advanced enough as a society that repealing the Civil Rights Act will have no (or incredibly minor) ill effects on society at large.  But I don’t think we’re ready to take that chance (and given Paul’s backing away from his statement and repeated support for the act as a whole, he apparently feels the same).  For now, I’m happy with civil rights legislation as it stands, and until I see an overwhelming swell of support for its repeal (with a sizable amount of that support coming from traditionally discriminated against groups; getting a majority of white people to support the right to discriminate could just mean they want to discriminate), I’m fine with keeping the status quo.

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