I don’t like racism or sexism or other discrimination of that nature. I think it’s illogical, stupid, damaging and counter-productive. But as a libertarian*, I firmly believe it should not be illegal.
Public institutions absolutely should not discriminate – they are meant to represent or serve all citizens regardless of sex, colour, race, culture, etc. People and private groups, on the other hand, should not be prevented from discriminating. To do otherwise impinges on freedom of thought, freedom of speech, freedom of association and disassociation. And they’ll do it anyway, they just have to be sneaky about it.
Previously, when people would say to me that allowing discrimination by employers, for example, was unfair or inequitable, the cynic in me wants to say, “Well, the world is unfair and unequal. That’s life.” That’s true, but it’s also inadequate. So instead, I would explain that, short of mind control, discrimination is impossible to eliminate by force, and that we should let the sum of voluntary individual actions (aka ‘the market’) work to reduce it.
The economic logic goes like this. One particular racist employer will not employ people of a certain ethnicity. That means he reduces the pool of possible employees, in other words the supply of labour. Reducing supply increases the cost, so his profit goes down. The employer who does not discriminate like that has bigger profits, and out-competes the racist. The same logic applies to sales or purchases.
In short, it’s in a person’s interest not to discriminate. It doesn’t matter if they behave counter to their interest – if they stubbornly stick to racism, they will go out of business, or at least reduce their market share and thus their ability to make life miserable for whoever they irrationally dislike.
It’s a strong argument, but of course the logic only holds if the market is competitive. Government laws and regulations that serve to protect established businesses will diminish this positive aspect of market forces. Reducing that regulation should improve things**, and I’m happy to report that this effect been verified empirically.
An extract: “when American states liberalised their uncompetitive banking markets between the mid-1970s and 1994, one of the little-noticed side effects was a reduced wage gap between blacks and whites…their results suggested that about 22% of the racial gap had been “competed away”.”
Yay for the profit motive!
** This is not to say that deregulation will eliminate discrimination, only that it will reduce it. Getting a genuinely tolerant society is a long and slow project. Free markets will help (by the above mechanism, and also by reducing social tension through increased wealth), but the rest will have to come from education and debate and changing social mores over the long term.