Market Is Color-blind

November 23, 1964

With all the agitation in recent years for equal civil and economic rights for Negroes, it is strange that so little analysis has been directed to the economic delusions and measures that have encouraged discrimination and the economic reforms that might remove or mitigate it.

A book just published in London by the Institute of Economic Affairs and Andre Deutsch—The Economics of the Colour Bar” (15 shillings)—goes a long way to make up this deficiency. It is written by an eminent South African economist, Prof. W.H. Hutt. While it is chiefly devoted to the racial situation in South Africa, the author tells us that it simply uses the experience of that country in an attempt “to expose the ultimate origins of colour injustices generally.”

The central theme of the book is that if South Africa had continued the development of an economy of competitive economic freedom, it would have ameliorated or prevented the racial tensions there. But these have been aggravated by the government’s restrictionist policies and by the efforts of higher-paid white workers to protect privileged positions.

COST OF PREJUDICE

Hutt’s main point is that a competitive free-market system is colorblind: “When we buy a product in the free market, we do not ask: What was the colour of the person who made it? Nor do we ask about the sex, race, nationality, religion, or political opinions of the producer. All we are interested in is whether it is good value for the money. Hence it is in the interest of businessmen (who must try to produce at least cost) . . . to seek out and employ the least privileged classes.”

Employers are not necessarily free, or freer than others, from racial, sex, religious, or nationalistic prejudices. But their prejudices always cost them money. If a Negro can perform as good a job as a white worker for less pay, or turn in a better job for the same pay, a white employer who refuses to employ him simply because of his color merely injures himself. His prejudice reduces his potential profit, and may even imperil his economic survival.

In the eyes of an anticapitalist mentality, employers can never do anything right. They are now getting the chief brunt of the blame for discrimination against Negroes in hiring practices. Yet what they were always blamed for in the past was their failure to discriminate against women, Negroes, immigrants, and others. Read the leftist history books, and you will find American employers being denounced for favoring freedom of immigration so that they could always be sure of a “cheap” labor supply. Or of employing Mexican “wetbacks” in the Southwest, or Negroes anywhere instead of whites.

PHILADELPHIA STRIKE

A main problem of employers in the past, however, has been to get many white-dominated unions to admit Negroes or accept them as fellow employees. A dramatic example was the Philadelphia strike twenty years ago. The country was at war. On Dec. 27, 1943, the Philadelphia Transportation Co. was ordered by the President’s Fair Employment Practice Committee to stop discriminating against Negroes in upgrading employees and training new ones. The company replied that it had no objections provided its employees would not consider this a violation of the union contract. The union protested, and nothing was done.

On July 8, 1944, however, the company posted notices in its barns stating that it was accepting all qualified applicants for employment. Shortly afterward eight maintenance workers, all Negroes, began training as motor-men. On Aug. 1, a strike broke out, accompanied by rioting. It quickly spread to all 6,000 employees. The city’s 1,982 streetcars, 369 subway and elevated cars, and 564 buses were brought to a halt. The strikers voted against returning to work, even under Army control, unless given guarantees against the employment of Negro operators. The strike lasted a week, and was brought to an end only when the Federal government issued an ultimatum that strikers that did not return to work would be drafted into the Army.

Federal law cannot continue explicitly to sanction the compulsory union shop and at the same time to tolerate the closed union.