Racism: Public and Private; W. Block

28 Racism: Public and Private by Walter Block W hen an individual or a group of per sons in the private sector discrimi nates against a racial or ethnic mi nority, the results can be debilitating. Psycho logical harm, feelings of isolation, and a sense of hostility are likely to result. Fortunately, in the private sector there is a little-recognized phenomenon which helps 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 em ployment, this tends to drive down their wage rates. However, the lower wages they now command act as a magnet, inducing other em ployers 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 busi ness. This is hardly an ideal situation from the viewpoint of the minority-they would be bet ter off with no discrimination. But at least this aspect of the free market tends to reduce the injury which would otherwise accompany dis crimination.

Things are far worse for the minority victim ized 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 pri vate sector. For another, civil servants dQ not run the risk of bankruptcy at the hands of nonDr. Block is Senior Economist at The Fraser Institute, Van couver, Canada. 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, un til 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 bu~ companies would have been formed, and would have enjoyed an inside track in competing for black customers.

Sometimes discrimination in the public sec tor is so well camouflaged that few people re alize it is taking place. For example, the Hut terites were victimized by discriminatory legislation in the Canadian province of Alberta that did not even mention them by name! These people commonly live in colonies of 100 fam ilies 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 sup port 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.