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Racism: Public and Private
660 words The Freeman
page 1 of 3 Foundation for Economic Education
Irvington-on-Hudson, New York 10533
(914) 591-7230
Racism: Public and Private
by Walter Block
When an individual or a group of persons in the private
sector discriminates against a racial or ethnic minority, the
results can be debilitating. Psychological harm, feelings of
isolation, and a sense of hostility are likely to result.
Fortunately, in the private sector there is a little-
known phenomenon which tends to protect minorities from great
economic harm: the fact that private individuals tend to pay
for their discrimination. For example, if a segment of the
population is discriminated against in employment, this tends
to drive down their wage rates. However, the lower wages they
now command act as a magnet, attracting other employers to
make them job offers. Employers who discriminate pass up
these lower wages. Other things equal, competition will tend
to drive the discriminating employers out of business.
This is hardly an ideal situation from the viewpoint of
the minority -- they would be better off with no
discrimination. But at least this aspect of the free market
tends to reduce the injury which would otherwise accompany
discrimination.
Things are far worse for the minority victimized by
government discrimination. For one thing, the incomes of
prejudiced bureaucrats and politicians are protected from
market forces. Their incomes do not tend to fall, as they do
for prejudiced businessmen in the private sector. For
another, civil servants do not run the risk of bankruptcy at
the hands of non-discriminating competitors -- their jobs are
guaranteed.
Consider, for example, the "back of the bus" rules which
discriminated against blacks in the South. This aspect of Jim
Crow was part and parcel of government. The buses were part
of the public sector; they were subsidized, and no competition
was allowed. As a result, blacks had to suffer discrimination
for many years, until the "back of the bus" rules finally were
changed through massive demonstrations. Had blacks been told
that they could ride only in the back of the bus in a market
situation, other bus companies would have been formed, and
would have enjoyed an inside track in competing for black
customers.
Sometimes discrimination in the public sector is so well
camouflaged that few people realize it is taking place. For
example, the Hutterites were victimized by discriminatory
legislation in the province of Alberta that did not even
mention them by name! These people commonly live in colonies
of 100 families or more. But the economics of farming in this
part of the prairie are such that each colony needs two or
three square mile sections to support itself. An Alberta law
which restricted holdings by size thus made it very difficult
for the Hutterites to form colonies.
But well-hidden public discrimination is by no means
limited to rural areas. In Vancouver there is a crackdown on
illegal suites, and a ban is in the works for second kitchens
in areas zoned for single-family occupancy. None of the laws
mentions the Sikh community by name; nonetheless, this spate
of legislation singles out the East Indian community for
discriminatory treatment. The reason is not difficult to
fathom. Like the Hutterites, Sikhs live in very large groups.
According to Gurnam Singh Sanghera of the East Indian Workers
Association of Canada, many ethnic communities live with three
or four generations under one roof -- and with an extended
family in each generation of aunts, uncles, cousins, etc.
Were the private sector discriminating against the Sikhs
or Hutterites, these groups could find accommodations, albeit
perhaps at slightly higher prices than otherwise. But when
they are victimized in the public sector, their plight is far
more serious. They must convince a majority of the electorate
-- many of whom are hostile to them -- of the injustice in
discriminatory laws. History tells us this is no easy task.
Given that public-sector discrimination is far more
harmful to minorities than private discrimination, those who
sympathize with racial and ethnic victims should think twice
before entrusting human rights to the state. The market is a
far better alternative.
______________________________________________________
Dr. Block is Senior Economist at The Fraser Institute,
Vancouver, Canada. This article is from the January 1989
issue of The Freeman.
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