Mr. Bixler Is a graduate of Grove City College with a degree In economics. He Is presently an officer of the Union Bank and Trust Co., Erie, Pennsylvania. Much of the case for the free market is built upon the belief in the sanctity of free choice. This includes not only the freedom to trade and associate with whomever one chooses, but also, and equally important, the freedom not to trade or associate. There are only two ways for man to satisfy his needs. One method involves the use of coercion, which includes the threat of violence or force. The other is freedom, involving the process of voluntary exchange. In acting to further his own well-being, man will not exchange values unless he believes he will benefit by doing so. A man who purchases a new suit for example, values the suit more than he values the money given in exchange. The merchant values the money more than the suit. Both parties have improved their positions. Whenever a third party enters the picture, either preventing exchanges that would normally have taken place, or forcing a person on either side of a trade to make an exchange against his will, mutual benefit is no longer present. One or both parties to the transaction must necessarily lose. Such a restriction of freedom is evident in the various laws intended to provide equal employment opportunity for minorities, women, handicapped individuals, and the like. These laws are essentially denials of the market process of voluntary exchange, with consequences detrimental to all parties involved. The Random House Dictionary defines discrimination as follows: “to make a distinction in favor of or against a person or thing on the basis of the group, class, or category to which a person or thing belongs, rather than according to actual merit.” The alleged intent of the equal opportunity laws is to insure against discrimination. In order to prove that employers have discriminated against minorities in their hiring and promoting policies, the government must have a method to demonstrate that discrimination has occurred. One method commonly used is statistical representation. An analysis of the percentages of various minority groups in the population is compared to the percentages employed in a given industry. Assuming a minority comprised twenty per cent of a given population, this theory holds that if the percentage of this same minority in the industry is only five per cent, then discrimination has taken place. This procedure, however, does not allow for differences in age and education among individuals. The fallacy of statistical representation as evidence of discrimination is well documented. Thomas Sowell, a black economics professor at U.C.L.A., writes the following:
Much of the case for the free market is built upon the belief in the sanctity of free choice. This includes not only the freedom to trade and associate with whomever one chooses, but also, and equally important, the freedom not to trade or associate.
There are only two ways for man to satisfy his needs. One method involves the use of coercion, which includes the threat of violence or force. The other is freedom, involving the process of voluntary exchange.
In acting to further his own well-being, man will not exchange values unless he believes he will benefit by doing so. A man who purchases a new suit for example, values the suit more than he values the money given in exchange. The merchant values the money more than the suit. Both parties have improved their positions.
Whenever a third party enters the picture, either preventing exchanges that would normally have taken place, or forcing a person on either side of a trade to make an exchange against his will, mutual benefit is no longer present. One or both parties to the transaction must necessarily lose.
Such a restriction of freedom is evident in the various laws intended to provide equal employment opportunity for minorities, women, handicapped individuals, and the like. These laws are essentially denials of the market process of voluntary exchange, with consequences detrimental to all parties involved.
The Random House Dictionary defines discrimination as follows: “to make a distinction in favor of or against a person or thing on the basis of the group, class, or category to which a person or thing belongs, rather than according to actual merit.” The alleged intent of the equal opportunity laws is to insure against discrimination. In order to prove that employers have discriminated against minorities in their hiring and promoting policies, the government must have a method to demonstrate that discrimination has occurred.
One method commonly used is statistical representation. An analysis of the percentages of various minority groups in the population is compared to the percentages employed in a given industry. Assuming a minority comprised twenty per cent of a given population, this theory holds that if the percentage of this same minority in the industry is only five per cent, then discrimination has taken place.
This procedure, however, does not allow for differences in age and education among individuals. The fallacy of statistical representation as evidence of discrimination is well documented. Thomas Sowell, a black economics professor at U.C.L.A., writes the following:
If various ethnic groups were approximately similar in age distribution and education, representation, based on comparisons of a given group’s percentage in the population, might make sense . . . . Virtually every underrepresented racial or ethnic group in the U.S. has a lower than average age and consists disproportionately of children and inexperienced young adults. Almost invariably these groups also have less education, both quantitatively and qualitatively . . .
Half of the Jewish population of the U.S. is forty-five or older, but only twelve per cent of the Puerto Rican population is that old. Even if Jews and Puerto Ricans were identical in every other respect, and even if no employer ever had a speck of prejudice, there would still be huge disparities between the two groups, in top level positions, just from age differences alone . . . . Representation in such jobs cannot be compared to representation in a population that includes many five year olds. Yet it is.
Affirmative Action Quotas
Government bureaucrats, however, armed with supposedly conclusive proof of discrimination, then impose various quotas which they believe will insure that no individual will suffer any form of discrimination. Wrapped in the guise of “affirmative action” laws, these quotas present an employer with a curious dilemma. If the law dictates, for example, that he increase the number of minority group employees from five to ten, he must in the process, actually discriminate against those individuals who are not members of a minority group. This is referred to as reverse discrimination. To be consistent, it should be opposed as fervently as discrimination against minorities. The employer has clearly “made a distinction in favor of” those members of a designated minority group.
Similarly, because of quotas, an employer is forced to discriminate against individuals who are not included in such categories—individuals such as disabled veterans, Vietnam veterans, and handicapped persons. How is the employer to explain his failure to adhere to a supposed policy of nondiscrimination while in the process of implementing various quotas he must blatantly discriminate against non-categorized individuals?
The government, in its attempt to provide equal employment opportunity, has, in effect, designated special categories of people as automatically less qualified simply because they fall within that group. This seems to indicate a belief that minorities are losers who will never have anything unless someone gives it to them. As a result, members of minority groups eventually must come to wonder if they receive their positions because of their merits (measured as for everyone else) or because they are a minority.
The Unchangeable Past
One of the major arguments presented by those in favor of affirmative action is that it will in some way atone for the ill-treatment of minorities in the past. A closer examination of the logic behind this argument reveals that it embodies the belief that two wrongs make a right. Is it reasonable to believe that giving someone a special privilege today will compensate for the mistreatment of someone else one hundred years ago? Again, Professor Sowell explains:
The past is a great unchangeable fact. Nothing is going to undo its sufferings and injustices, whatever their magnitude . . . . Neither the sins nor the sufferings of those now dead are within our power to change. Being honest and honorable with the people living in our own time is more than enough moral challenge, without indulging in illusions about rewriting moral history with numbers and categories.
Affirmative action has other effects upon the employer and the employees which must be considered. In most cases, employees working together will get along better, and thus be more productive, if they know they were all hired or promoted on the basis of roughly similar qualification standards, rather than to fill some quota mandated by government. Cooperation among employees and higher productivity are goals for which most employers continually strive.
Additionally, the lowering of employment standards in order to reach certain objectives is highly suspect. These lower standards mean that an employer is forced into hiring and promoting people other than the best available to him. Operating efficiency is correspondingly lower than it otherwise would have been. These policies must ultimately lead to ill will and conflict among employees.
In many cases affirmative action has provided employers with incentives which are contrary to its intent. Employing someone to fill a quota gets the government off an employers back for the moment, but somewhere down the road he faces the possibility of a costly lawsuit brought by unhappy applicants or employees claiming that quotas denied them a position. The threat of such action is an incentive not to hire or promote from the groups designated by the government.
Similarly, the logic of the equal opportunity laws presents another dilemma to the employer. Suppose a given employer actually wants to hire more minority group members and afford them greater opportunities than he believes they have had in the past. If he consistently hires the minority group member from a number of applicants with similar qualifications, he is not complying with the law. The current law dictates that he should not be allowed to put his beliefs into practice!
The law thus harms (1) the employer, who seeks higher productivity, greater efficiency, and larger profits, (2) other employees who desire to be treated fairly, and (3) the minority group member, who must suffer a loss of pride and self-esteem.
Looking at the other side of the employer-employee relationship affords another perspective on the argument.
An applicant for a job is filling the same role as does a consumer in any other transaction. What is often forgotten is that a job is really the same as any other exchange. The difference is that it is ongoing. The employer trades wages or salaries in exchange for the employee’s labor and/or services. The employee exchanges his labor for wages.
Employees and applicants discriminate in their choice of and in their dealings with their employers. These choices are quite often made on the basis of what many people would refer to as irrational reasons. As an example, it would probably be impossible to ascertain how many applicants refused a position (or how many simply did not apply) because they believed their future supervisor’s dress was inappropriate, hair too long, or skin color objectionable.
Intervention by government on only one side of the employer-employee exchange seems inconsistent. Surely an employer could show that he had been harmed by qualified applicants who had refused positions on the basis of whim or prejudice.
Only one person can work at each job. Consequently, there must be discrimination; someone must choose the one for the job. The question then is: Who shall have the right of decision?
An Arbitrary Decision
The government has no basis for deciding who shall have a particular job in the private sector. The bureaucrat can make only an arbitrary decision. He is usually far removed from the day-to-day personnel decisions made by individual employers. Laws passed to eliminate discrimination in employment in reality do not eliminate it at all. They merely transfer the right of discrimination to the government bureaucrat.
We frequently lose sight of the fact that government is not the selfless, unerring, organization it is often pictured to be. It is indeed made up of individuals subject to the same fundamental laws of human action as are all other persons. Be-cause we sometimes forget this fact, government is often assigned powers that, if thought of in terms of particular individuals, would be considered totally unacceptable.
What would our reaction be, for example, if our neighbor were to threaten us at gunpoint if we did not hire his fifteen-year-old son to mow our lawn? Surely we would consider this a flagrant violation of our individual freedom of choice.
What accounts for this widespread belief in the omniscience of government? Why is the bureaucrat looked to for answers to problems that most people would consider to be none of his concern? The answer might be found by taking a closer look at the nature of bureaucracy.
The bureaucrat has an unquestioned and seemingly never-ending desire to extend his power and influence. Lacking a market test of his skills, he must prove his value through his ability to curry political favor. He feels that in order for anything to function smoothly, he must control it.
Coupled with this is the bureaucrat’s belief that individuals for the most part simply are not intelligent enough to handle their own affairs. Yet, these same individuals supposedly are smart enough to elect their rulers, who will gladly tell them how to run their own affairs!
Furthermore, the bureaucrat usually cannot see, or is not interested in, the long-term consequences of his actions. He is interested only in what will enable him to maintain his position. The bureaucrat tends to lose sight of the indirect effects upon all other indi viduals who are not directly in the path of his regulations.
Possibly the overriding reason why bureaucrats favor anti-discrimination laws is that it simply is not in their interest to lose the “minority problem” issue. Huge empires have emerged to administer the various equal employment opportunity programs. It is in the best interests of the individuals connected with these agencies to see their particular bureaucracy grow larger. It is not in their interest to find a solution to the “problem” for which their agency was created. If suddenly the problem were to be solved, there would no longer be a need for these empires, and the bureaucrats would be out of a job.
The question remains: Who is to have the right to choose the one for the job?
If we think of a job or position in terms of an ongoing voluntary ex-change, it follows that the employer and the employee are the only two persons who have a proper interest in the matter. Third party claims usually introduce conflict and injustice.
Whose Choice Is Valid?
Proponents of affirmative action claim that, in cases where relative equality in productivity can be shown, there is harm done to minority groups when an employer refuses to hire from these groups. Is this a valid claim?
Would we consider it “discrimination” for example, if an individual chose to go to a concert to hear a classical pianist rather than a jazz pianist? Certainly not. It would be viewed as evidence of the individual’s taste.
Many people object, however, when an employer prefers to hire a white person over a black person, or a male over a female. The objectors claim that those not hired have been harmed. But what about the jazz pianist? Assuming a great many people prefer classical music to jazz, is the jazz pianist not also harmed as a result of the limiting of his employment opportunities?
In fact, the jazz pianist is being “harmed.” He would obviously be better off if more people preferred his music to that of the classical pianist. But if one person can find employment and another cannot, it means that one is rendering services which the community regards as worth paying for and the other is not. As Milton Friedman points out, there are two very different kinds of harm:
One kind is the positive harm that one individual does another by physical force, or by forcing him to enter into a contract without his consent. An obvious example is the man who hits another over the head with a blackjack . . . . The second kind is the negative harm that occurs when two individuals are unable to find mutually acceptable contracts, as when I am unwilling to buy something that someone wants to sell me and therefore make him worse off than he would be if I bought the item . . . . There is a strong case for using government to prevent one person from imposing positive harm, which is to say, to prevent coercion. There is no case whatsoever for using government to avoid the negative kind of “harm.” On the contrary, such government intervention reduces freedom and limits voluntary cooperation.
In our example, discrimination has occurred in both cases. The difference is that we sympathize with the individual’s choice, but we do not agree with the choice made by the employer. But what areas of the market are to be exempt from laws prohibiting free choice if the justification for such laws is the belief that one group may impose their tastes on another?
Discrimination involves the right to choose between values. The individual’s right to choose is fundamental to the process of voluntary exchange. In order to make a choice between alternatives, he must possess the ability to distinguish between values. Laws against discrimination attempt to eliminate the differences in these values, in the process removing the ability to differentiate. Ultimately all exchange would come to an end. As F. A. Harper points out:
One cannot question the basis for a choice without questioning the right of choice itself. There isn’t much sense to saying that I have the right, for instance, to select any kind of cheese I wish, but that I have no right to select one in preference to another because it tastes better, or has a more appealing color, or is made from the milk of better cows. The right of choice is the right of choice; the reasons therefor become a sacred part of the right of choice itself.
Government Dictates Everything
Equal opportunity laws, if taken to their logical conclusion, appoint government as the sole determinant not only of who is to be employed, but also where a person works, at what wages, conditions, hours, and so on. If it is admitted that government intervention is necessary in one area of individual consumption because some persons make choices which are deemed unacceptable, then shouldn’t government dictate all choices?
Soviet Russia and similar totalitarian countries are examples of nations that have attempted to eliminate freedom of choice in employment. Are we to think that there is greater opportunity in such countries? Are working conditions and living standards in these countries superior to those enjoyed by people who have been allowed some measure of free choice?
In any society, some individuals may indeed be extremely prejudiced or even bigoted. What must be recognized, however, is that prejudice and bigotry are impossible to elimi nate by passing laws. Man should be entitled to whatever prejudices he wishes. This is his opinion. What he should not have is the right to impose his prejudices on others. As Ayn Rand points out:
No man . . . has any claim to the property of another man. A man’s rights are not violated by a private individual’s refusal to deal with him. Racism is an evil, irrational and morally contemptible doctrine—but doctrines cannot be forbidden or prescribed by law. Just as we have to protect a communist’s freedom of speech, even though his doctrines are evil, so we have to protect a racist’s right to use and dispose of his own property. Private racism is not a legal, but a moral issue—and can be fought only by private means, such as economic boycott or social ostracism.
Proponents of the equal opportunity laws are thus faced with the reality that what they advocate is actually an embodiment of the very principles which they supposedly abhor. By clamoring for “racial equality” they are, in effect, calling for a clear distinction among various minorities. This serves only to stereotype certain minority groups as underprivileged, uneducated, or whatever. One wonders who the real advocates of racism are if the title cannot be applied to those proponents who favor special treatment for some individuals at the expense of the rights of others.
We must then object to the equal opportunity laws for two reasons.
First, they do not accomplish what is intended. Indeed they are actually detrimental to all parties concerned, including those whom they were designed to help.
Second, they are based on the fal: lacy of interventionism which, when taken to its logical conclusion, denies all men the freedom of choice, thereby violating the principles of individual liberty.
Assuming that the ends we desire involve a reduction in the extent to which minorities will suffer disadvantages in the market, what can be offered to provide these ends?
Clearly, it must be a system that provides incentives for employers and consumers to cast aside such differences in individuals as skin color, religion, background, and so forth. It must be a system that emphasizes man’s productive ability and not who his ancestors might have been—one that rewards ambition and individual ability. This system is called free market capitalism.
It is the free market that has provided minorities the greatest source of opportunity with respect to their economic activities. The free market provides great incentives for producers to use the factors of production as efficiently as possible. An employer who practices irrational discrimination in employment will suffer as a result. Milton Friedman explains this process as follows:
. . . there is an economic incentive in a free market to separate economic efficiency from other characteristics of the individual. A businessman or an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a disadvantage compared to other individuals who do not. Such an individual is in effect imposing higher costs on himself than are other individuals who do not have such preferences. Hence, in a free market they will tend to drive him out.
Similarly, a consumer must also bear the costs of his discrimination in the form of lost services. If he refuses to buy goods or services from individuals he dislikes, he thereby limits his range of choices. He may then have to go without such goods or services or will generally pay a higher price for what he does buy or receive elsewhere.
Far from being the enemy of minority groups, it is the free market that can provide real gains for all minorities as it continually imposes high costs upon employers who choose to hire on the basis of irrelevant characteristics instead of on the basis of merit and qualifications.
The market process of voluntary exchange will always be superior in its ability to satisfy consumer desires. Those who defend free market capitalism see discrimination as a necessary ingredient in this process. Our freedom to make choices is the basis for all market activity. In the words of F. A. Harper:
If there were no discrimination in employment—no rights of choice—there would be no means by which persons could find their best place to work; no means by which persons could develop and use their best talents; no means by which management could be good rather than bad; no means by which accomplishment and merit could find reward.
Discrimination, then, is vital to the proper functioning of the market economy. It is a process of differentiation—a process by which we demonstrate our preferences. The individual must be free to choose. He must have the right to discriminate between values.
Laws which restrict two or more individuals from entering into voluntary contracts, or which force them to exchange against their will, cannot be shown to be the policies necessary for human progress. If some people make decisions which we view as immoral, the way to change these values is by peaceful persuasion. The solution is surely not to impose our values on others.
If our goal is to provide a system that will produce the highest standard of living for all men, one which provides the most efficient means of satisfying human wants and desires, one that is consistent with the principles of private property and voluntary exchange, then we must take every opportunity to advance the fundamental concepts of individual liberty. We must choose freedom.