The Freeman 1989 - The Ludwig von Mises Institute

28Racism: Publicand Privateby Walter BlockWhen an individual or a group of personsin the private sector discriminatesagainst a racial or ethnic minority,the results can be debilitating. Psychologicalharm, feelings of isolation, and a senseof hostility are likely to result.Fortunately, in the private sector there is alittle-recognized phenomenon which helps toprotect minorities from great economic harm:the fact that private individuals tend to pay fortheir discrimination. For example, if a segmentofthe population is discriminated against in employment,this tends to drive down their wagerates. However, the lower wages they nowcommand act as a magnet, inducing other employersto make them job offers. Employerswho discriminate pass up these lower wages.Other things equal, competition will tend todrive the discriminating employers out of business.This is hardly an ideal situation from theviewpoint of the minority-they would be betteroff with no discrimination. But at least thisaspect of the free market tends to reduce theinjury which would otherwise accompany discrimination.Things are far worse for the minority victimizedby government discrimination. For onething, the incomes of prejudiced bureaucratsand politicians are protected from marketforces. Their incomes do not tend to fall, asthey do for prejudiced businessmen in the privatesector. For another, civil servants dQ notrun the risk of bankruptcy at the hands of non-Dr. Block is Senior Economist at The Fraser Institute, Vancouver,Canada.discriminating competitors-their jobs areguaranteed.Consider, for example, the "back of thebus" rules which discriminated against blacksin the South. This aspect of Jim Crow was partand parcel of government. The buses were partof the public sector; they were subsidized, andno competition was allowed. As a result, blackshad to suffer discrimination for many years, untilthe "back of the bus" rules finally werechanged through massive demonstrations. Hadblacks been told that they could ride only in theback of the bus in a market situation, other bu~companies would have been formed, and wouldhave enjoyed an inside track in competing forblack customers.Sometimes discrimination in the public sectoris so well camouflaged that few people realizeit is taking place. For example, the Hutteriteswere victimized by discriminatorylegislation in the Canadian province of Albertathat did not even mention them by name! Thesepeople commonly live in colonies of 100 familiesor more. But the economics of farming inthis part of the prairie are such that each colonyneeds two or three square-mile sections to supportitself. An Alberta law which restrictedholdings by size thus made it very difficult forthe Hutterites to form colonies.But well-hidden public discrimination is byno means limited to rural areas. In Vancouverthere is a crackdown on illegal suites, and a banis in the works for second kitchens in areaszoned for single-family occupancy. None ofthelaws mentions the Sikh community by name;nonetheless, this spate of legislation singles out