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the Fourth of July, the New York Times ran an article titled,
"Review of Nissan Car Loans Finds That Blacks Pay More."
It follows up on another Times story from last October, about
a lawsuit alleging that blacks are illegally charged higher finance
charges on car loans than whites. As I
wrote at the time, in an NRO piece, the story raises two basic
issues: Has racial discrimination occurred? And, if so, who should
be held liable for it? The new Times story raises more questions
than it answers for both issues.
As before,
the only evidence reported is statistical. That is, there are no
smoking-gun memoranda or e-mails cited by the Times in which
anyone says that blacks are to be targeted for unfavorable loan
terms, nor have any employees or former employees at Nissan been
quoted as saying that they had such a policy. Instead, the plaintiffs
point to the fact that "black customers in 33 states consistently
paid more than white customers, regardless of their credit histories."
The trouble
is, there are lots of other reasons besides creditworthiness that
might explain the different rates. (As noted above, the Times
story asserts that a study filed by the plaintiffs purports to control
for credit histories; while plaintiffs offered to send me their
evidence, as of this writing they have not; nonetheless, I'll take
them at their word.) Among the other factors that might also explain
why whites are more successful in getting lower interest rates than
blacks: higher income and greater wealth (making it more likely
that they will simply walk away from credit discussions, deciding
to pay cash instead); more knowledge of and access to other loan
opportunities (through the Internet, for instance); higher educational
levels and perceived savviness; even a higher proportion of male
buyers (in other words, the culprit may be more sex than race discrimination).
Not Real Discrimination, but "Disparate
Impact"
In all events,
the Times reports that "both sides agree that the giant
lenders do not even know the race of the customers whose cars they
finance." Thus, "None of the companies are accused of
racial bias …." But if they are not racially biased, how
can they be accused of racial discrimination?, you might ask.
The answer
is through the magic of the "disparate impact" approach
to civil-rights enforcement. If the defendant has a selection process
that results in a racial imbalance, then that process is illegal
unless it can be justified by some sort of "business necessity."
This theory is a powerful engine for racial quotas, which is why
the left likes it so much. It was originally limited to the areas
of employment and voting, where it was bad enough, but now civil
rights advocates are trying to expand it to other areas — like lending,
education, and even environmental law — where it will be even worse.
Some might
retort that, even if the finance companies aren't really discriminating,
the dealerships might be. But, even if such discrimination is occurring
at the dealership level, is not likely to be attributable to a dislike
for blacks and desire to hurt them for the sake of hurting them.
Rather, it is because blacks are perceived as being more willing
to accept higher finance charges than whites are. That is discrimination
— and it is wrong and illegal — but it is based on a kind of profiling
that liberals, especially, might sympathize with: that blacks are
more economically hard-pressed than whites.
In any event,
even if the dealerships are discriminating, why does it make sense
to hold the finance companies liable if they played no role in the
discrimination? Unfortunately, the federal government — under the
Clinton administration — has filed a brief favoring this dubious
theory of vicarious liability.
Putting Things in Perspective
Here are a
couple of other items to put the Nissan lawsuit in perspective.
A similar lawsuit has been brought against Ford and, at the same
time the Nissan story was breaking, there were articles about how
Ford has also been sued for discriminating against white employees.
The plaintiff in this lawsuit says he has smoking-gun communications
that prove Ford discriminates against white men. It is a bit odd
that the same company can be sued for having a policy of discriminating
against minority loan applicants, and with wanting to have that
policy carried out by, uh, minority employees.
Second, the
same day I began working on this article I appeared on a Baltimore
public radio station to discuss a local law professor's call for
"truth and reconciliation commissions" that would "engage
in cross-racial dialogue" about lynching. The professor began
with an anecdote about the 1921 antiblack riot in Tulsa. While being
careful not to take a pro-lynching position, I did point out that
most of the people around for that riot are now dead. Indeed, according
to the 2000 census, the median age in the United States now is 35,
meaning most Americans now were born in 1966 or later, so that they
have lived their whole lives after the 1964 Civil Rights Act and
1965 Voting Rights Act. For that matter, a graph of lynchings from
1882 to 1968 is flat at zero after 1950, and dipped below 20 per
year in 1925 and never again rose above that level. Oh, and the
front page, above-the-fold headline in the Washington Post
that day was, "Biracial Couples Report Tolerance/Survey Finds
Most Are Accepted by Families." So much for stringing up a
black man for looking at a white woman.
And what does
lynching have to do with car-loan discrimination? Not much, which
is exactly my point. The civil rights issues in 2001 are now about
whether a car company should be liable for nondiscriminatorily choosing
a racially neutral policy that has the effect, but not the intent,
of creating a black-white gap in finance charges of a few hundred
dollars.
Moreover, the
only way this could have become an issue at all is because there
are lots and lots of African Americans buying cars, and in every
income class so that the cross-racial comparisons in the Nissan
study are possible. According to Michael Barone's recent book, The
New Americans, "By 1995, the median income of black
married-couple families was 87 percent that of whites." And
according to Stephan and Abigail Thernstrom's America
in Black and White, "The black middle class is now
proportionally as large as the white middle class was at the end
of Dwight Eisenhower's second term, a time when American society
as a whole was usually described as predominantly middle class."
On the eve
of his organization's annual convention New Orleans, NAACP head
Kweisi Mfume called on the Bush administration this weekend to "focus
on racial profiling, election reform and racial disparities in the
death penalty," according to the Washington Post. Again,
if these are Mr. Mfume's top three, it is cause for celebration,
since for the latter two it is extremely doubtful that there is
any discrimination going on at all and, for the former, one is hard
pressed to find a single public official who defends the practice.
The only discouraging
lesson from all of this is the fact that so many in the plaintiffs'
bar, academy, and civil-rights establishment insist on trying to
advance an "antidiscrimination" agenda that has nothing
to do with actual discrimination.
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