Race and Economics: How Much Can Be Blamed on Discrimination?, by Walter E. Williams (Hoover, 174 pp., $14.95)
For decades, economist Walter E. Williams has been touting the benefits of free markets, arguing that they’re not only economically efficient, but also the best way to improve the lot of the poor. He returns to that line of argument in Race and Economics, a collection of essays that are connected only loosely — all they have in common is some relation to the two topics in the book’s title. Most of them simply reiterate points that Williams has made many times in his illustrious career: Occupational-licensing laws make it hard for people with low skill levels, a group that includes a disproportionate number of minorities, to start barbershops and other businesses; minimum-wage laws make it too expensive for businesses to hire this same group of people; labor unions have often conspired to keep out competition from blacks; and so on. As an introduction to these ideas, the book works extremely well.
The most radical and interesting chapter is the final one, “Racial Terminology and Confusion,” a discussion of discrimination. This essay covers a lot of ground: Williams critiques the way such words as “prejudice” and “segregation” are thrown about in our public debates, and he convincingly argues that real racial differences, not any kind of bias, are to blame for many racial gaps (such as those in mortgage lending and neighborhood grocery-store prices).
Most notable, though, is Williams’s contention that it should be legal for private businesses to discriminate on the basis of race. Unfortunately, Williams never makes the boundaries of this argument clear: Were anti-discrimination laws wrong from the start, or have they outlived their usefulness? Should they be eliminated entirely, or scaled back to prohibit only the most extreme forms of prejudice (“blacks need not apply”)? What is clear from the chapter, however, is his belief that businesses should be allowed to factor race into their hiring decisions, at least in many circumstances.
Of course, even 50 years after the civil-rights era, many businesses still do this, as proven in sociological experiments using “matched pairs”: Researchers send out white and black actors to apply for jobs, and these actors all claim to have the same qualifications. Alternatively, to avoid the possibility that white and black actors might behave differently while applying, some researchers send out otherwise identical résumés with stereotypically white or black names. Both methodologies consistently show that black applicants get fewer callbacks.
When faced with this research, most conservatives and libertarians blurt out an accusation of “pseudoscience”; mumble something about illegitimacy, school choice, or ending the drug war; and change the subject. Refreshingly, Williams takes a closer look at the evidence instead.
What these studies miss, he argues, is that black and white applicants who look equal on paper tend to be unequal in other ways. For example, let’s say a business owner needs to hire someone with a high-school-level writing ability, so, to screen applicants, he requires a high-school diploma. Unfortunately, he will soon discover that this does not eliminate race as a consideration: On standardized tests, black students in the twelfth grade write about as well as white students in the eighth grade. Even if he holds no animus toward blacks whatsoever, this business owner might decide to start (illegally) discriminating against them, rather than go through the costly process of finding and implementing a better screening process. This is what some have called “rational” discrimination.
But to Williams, this isn’t merely an explanation for a bad behavior that has proven difficult to stop — it’s essentially a justification. Unfortunately, his arguments for seeing it this way will be unconvincing to anyone who doesn’t already agree with him.
The greatest problem with seeing employers’ rationality as a justification for their racial discrimination becomes clear when one looks at the situation from the standpoint of a job applicant. Yes, blacks and whites who are equal on paper tend to be unequal in actual skills — but what about blacks who have worked hard to ensure that they are equal in skills? Without anti-discrimination laws, the message sent to these blacks is that they have to jump through higher hoops than whites to achieve the same thing.
With any other minority group, that might be written off as an inevitable cost of efficiency in a free-market economy: If they don’t like the way they’re treated, they can leave, but they can’t deny businesses an effective hiring tool. But that is not a message our society should be sending to a group with blacks’ history, not if we view them as full and equal American citizens and expect them to view themselves as such — and further, under the Constitution, it would be difficult to grant this protection to blacks without granting it to all racial groups.
Williams concedes that blacks who face rational discrimination “may rightfully feel a sense of injustice and resentment,” but claims that those feelings should mainly be directed toward fellow blacks who underperform and give credence to negative stereotypes, rather than toward whites who refuse to give blacks a level playing field even when the law requires them to. But all this does is highlight a Catch-22: It is difficult for an underperforming group to improve its situation in the face of discrimination, and it is difficult to end discrimination when skin color is a reliable indicator of low performance. One can hope that blacks, as a group, will work harder in school, lower their illegitimacy and crime rates, etc., and perhaps we should focus more on that side of the equation than on discrimination — but in the meantime, it hardly seems unreasonable to mandate that blacks be given equal access to economic opportunities.
Essentially, Williams is overly hesitant to allow Americans’ basic sense of fairness, not to mention their understanding of America’s racial history, to enter into discussions of public policy. He proposes these analogies, and returns to them several times:
If people are free to discriminate in favor of, or against, a university or wine, what argument can be made against their having that same right with respect to choosing based on the race or sex characteristics of their mates, employees, tenants, or club members? If one shares the value of freedom of association, why should some associations be permitted and others denied? If a man is not permitted to bring a court action against a woman who refuses to [date or marry] him, what is the case for bringing court action for other refusals to “deal”[?]
The most obvious answer to this line of reasoning is this: Unlike any other group in American society, blacks were traded as slaves, and then denied their basic rights as citizens for a century. Therefore, if there’s one cause that’s worth sacrificing some degree of freedom of association for, it’s the quest for basic civil rights for blacks. Further, in evaluating the tradeoff between freedom and mandated fairness, it’s reasonable to draw a line between purely private and social matters (whom will I marry? whom will I invite to dinner?) and somewhat public, business-related ones (whom will I allow to shop in my store? whom will I hire?).
Williams does address elements of this argument, albeit briefly and unsatisfactorily. For example, he dismisses the notion that racial discrimination has worse consequences for society than wine discrimination: Sellers of discriminated-against wine, just like discriminated-against laborers, make less money. He claims that race and wine types are “basically different” only in that a person’s race is unchangeable, whereas a company can change the type of wine it sells; and he notes that we allow discrimination based on other unchangeable personal factors, such as intelligence. History and fairness do not factor into the equation, and neither does the difference between a job qualification itself (intelligence) and a mere statistical indicator of such qualifications (race).
Williams’s argument is at its weakest when addressing the “moral dimension” of discrimination: “The fact of a consensus on what constitutes moral or immoral preferences does not alter the facts” that preferences exist and there is “no commonly agreed upon standard” for determining which are immoral. The idea here, apparently, is that subjective moral values have no place whatsoever in public policy — even if they are widely held, uphold basic tenets of fairness, and were formed for the purpose of rectifying severe national wrongs. Only objective, “commonly agreed upon standard[s]” can form the basis of law. This is far too high a bar to set for a government composed of human beings.
But setting all of that aside, what kind of job market does Williams envision for low-skilled blacks? He points out that without anti-discrimination laws, employers who are hesitant to hire blacks might offer them jobs at lower wages, giving them a chance to prove their value. However, this once again poses a problem in terms of the message it sends: Race-based starting wages will not inspire faith in the American labor system among low-wage workers. In addition, smaller paychecks for blacks simply because they’re blacks means that work will be less rewarding for them.
There are plenty of reasons that anti-discrimination laws, in and of themselves, should make conservatives and libertarians uneasy. They tell businesses what criteria they may and may not employ in their hiring and customer-service practices. Enforcement is often overzealous, and the Left would like to make it even more so. And there are countless reforms that could make these laws more effective and less burdensome to businesses — for starters, businesses would be less likely to hire based on race if they were allowed to use objective tests without fear of lawsuits. (Under current law, it is far too easy for a passed-over minority applicant to argue that a test is inherently racist. In fact, thanks to a 1971 Supreme Court decision, many employers can’t even require high-school diplomas.)
Still, basic anti-discrimination laws constitute a core part of America’s commitment to stamp out Jim Crow and make race a less salient feature of everyday life. Rolling back that commitment is not only virtually impossible on the political level, but undesirable as a policy.