Forced or Forbidden Discrimination: Why Not Laissez-Faire?

The Supreme Court decision forbidding open racial preferences under the guise of anti-discrimination in university admissions invites some fundamental questions. We can think about these issues by examining three ideas or propositions relating to the broad issue of discrimination.

The first idea is that a government-imposed mandate of affirmative action is government-imposed discrimination. Government discrimination in the name of non-discrimination is self-contradictory. The only exception that I believe can be rationally justified is the one proposed by James Buchanan and Friedrich Hayek: it can be necessary, to maintain a free society, to prevent it from being flooded by a large number of immigrants who don’t support individual liberty. The reason is not that they will eventually vote but, more importantly, that rules of conduct such as tolerance or respect of individual dignity cannot survive after a certain threshold is reached where many members of society don’t follow these rules. This reminds us of games (in game theory) where cooperators are overcome by defectors after the latter reach a certain proportion of the players.

The second idea is that forbidding all racial discrimination (as the Supreme Court is, it seems, prudently trying to do for university admissions) is more coherent than only allowing what some people feel is the good sort.

Many libertarians and classical liberals will be disturbed by the fact that the non-discrimination principle affirmed by the Supreme Court applies not only to public universities (which should go without saying), but also to private ones (if there are such things left). This leads us to a third idea: although private discrimination based on personal characteristics that are irrelevant to social cooperation in a free society reveals a bigoted ethics, the consequences of private bigotry will be attenuated by market competition. If many individuals in society have a bigoted “taste for discrimination” (to use Gary Becker’s terminology), there will be discrimination, but it will be attenuated by the reality that, on the market (or in voluntary social relations in general), discriminators have to pay for bigoted behavior through lost profits or other advantages.

Among the many historical examples was the case of railroad companies in the Jim Crow era: greed led them to not discriminate against black customers, until Southern populist-minded governments forced them to discriminate. (See my “Jim Crow: More Racist than the Railroads,” EconLog, December 18, 2022.) Another example was the Negro Motorist Green Book, published annually from 1936 to 1967, to inform traveling blacks where they would be welcome, in hotels, restaurants, gas stations, or even public beaches and picnic places, instead of being harassed and humiliated if not worse. (See my “Markets Against the Mob’s Purpose,” EconLog, February 15, 2020.) Zoning was invented in New York City to stop the market (free landowners and landlords) from letting blacks get into white neighborhoods. Before this interventionist innovation, a real estate agent wrote in the New York Times of August 4, 1898 (quoted in Jonathan Rothwell, A Republic of Equals: A Manifesto for a Just Society [Princeton University Press, 2019]):

I assure you there is no sentiment about the property owners bringing colored people here. It is purely a matter of dollars and cents and self-interest. The negroes pay their rent regularly, and many of the white people do not.

Free markets (which entail a quest for customers) mitigated the taste for discrimination and its enforcement by governments. Not ideal, but better than if no market had existed and governments had been able to enforce their discrimination policies more tightly. It is indeed because markets were naturally efficient at attenuating private discriminatory sentiments that governments intervened. What we know about human history suggests that liberalism works against bigoted discrimination, while authoritarianism fuels it. Bigotry from society’s rulers is much worse than private bigotry.

If coercively imposing discrimination under the guise of anti-discrimination is illegitimate, as the Court ruled, and coercively imposing non-discrimination is very questionable from a classical liberal or libertarian viewpoint, why not laissez-faire?

In laissez-faire regime, public universities, if they exist, would of course be subject to a cardinal principle of liberal law: no government discrimination (and thus no affirmative action) against citizens (and even against non-citizens in many cases). As for private universities, each should be free to determine its own admission criteria. We could expect real competition and diversity among them. It would be surprising anyway if, in the intellectual climate of a university worth its name, bigoted morals could thrive.

As Paul Moreno notes in an interesting article at Law & Liberty, “racial proportionalism,” may well survive, in universities as elsewhere, under the label of “diversity, equity, and inclusion.” I have no illusion about the political feasibility of the laissez-faire ideal in the short run, but it is not a totally unrealistic hope for the longer term.