scaa contributors: E. Brown, P.. L. Mason

Some "conservatives" will state that Capitalism will ensure the "death" of racism; this is not true.

Case Study #1:

In New York, temporary employment companies were found guilty of discriminating against qualified Black applicants. When "test teams" were sent to the companies, the more qualified applicants were sent home and told they would be contacted when an opening occurred, while the less qualified white applicants were sent to companies to work. The temporary companies admitted that they discriminated and were fined. One head of a company stated they would not have done it IF THEIR CUSTOMERS had not made it clear to them that they only wanted white people for the temporary positions. What happened to the temporary companies customers? Nothing. The temporary company discriminated, not the temporary company customers. If the temporary company hadn't discriminated, the customer would have taken their business to another company that would have discriminated.

Case Study #2:

Housing discrimination: Logically, it makes *sense* to discriminate in housing if you are to believe the stereotypes that Blacks don't keep up their property. If a Black person moves into a neighborhood, the stereotype will lead a person to believe that the house will go into disrepair, driving down the property value of houses around them. So the people move out quickly, which helps to drive the property values down. Then, once the neighborhood is all Black, property values don't rise as quickly, not because the neighborhood has physically gone down, but because of the mere "belief" that it has gone down. Following this scenario, it makes economic sense to discriminate.

---------------------------------------------------------------------

Glenn Loury's position related...[ed.]

Indeed, Loury's claim to fame rests on two papers which demonstrated the following. Suppose we have a capitalist economy characterized by what orthodox economists call "perfect competition." Suppose further that in the past this economy has been characterized by wicked and extensive racial discrimination in employment, training, wages -- the whole labor market. Suppose further that laws were passed that made discrimination illegal and very costly for those firms which attempted to discriminate. Suppose also that these laws were stringently enforced. In other words, suppose we have the best conceivable circumstances for eliminating racial inequality in income. Loury queried, "Would market forces eliminate discrimination? If so, how long would it take?" Loury answered, "Acting alone, market forces would not eliminate racial inequality in income." Not tomorrow, not ever.

The upshot of Loury's argument is that past advantages provide whites with a nearly insurmountable advantage in the economy due to a host of non-market advantages (connections, schools, information, housing). Hence, Loury's support of affirmative action in education and also his support of housing desegregation.

In Loury's own words, "My argument turns on the extent to which social discrimination among today's citizen's will perpetuate indefinitely the group inequality engendered by past economic discrimination. Because the anti-discrimination principle does not extend into the most intimate of private, associational choices, it is compatible with the continued practice of racial discrimination in such choices. Yet this practice, together with a history of racial discrimination in the public sphere, will ensure that the consequences of past bigotry become a permanent part of the social landscape. To avoid this possibility, I argue, the use of group-conscious public action is justified."

(Glenn C. Loury, "Why Do We Care About Group Inequality?" in S. Shulman and William Darity, Jr., editors, The Question of Discrimination, page 286-287). This is a nontechnical article geared towards non-economists.

P. Mason 4/95