All Commentary
Saturday, July 1, 1989

Racial Tensions: The Market Is the Solution

Mr Bernstein is a student at Yale Law School

Relations between ordinary white and black Chicagoans, measured by the everyday small talk of people crossing paths, seem, if anything, to have become more cordial in the years since this city began pitting white candidates against black candidates. But in local politics . . . this city seems clearly to be moving closer and closer to a two-party system. And it is not the Democrats against the Republicans.”

So concludes an article in The New York Times Magazine (February 19, 1989) about the racial animosities stirred up by the mayoral race in Chicago, which pitted a white candidate against a black candidate in the Democratic primary.

Similar troubles are expected this year in New York City, where Mayor Ed Koch, who is white, will face off against Manhattan Borough President David Dinkins, who is black, in the Democratic primary. Both cities’ elections have been further complicated by the fact that in each city the black candidate needs the votes of liberal Jews to win, yet in each city black-Jewish political tensions also are on the rise.

There is no question that race relations have improved tremendously in the United States over the past 20 years. Indeed, the Times article acknowledges that interpersonal race relations even have improved in Chicago in recent years, despite the political tensions.

So if race relations generally are on the mend, why is this trend not reflected in the political news emanating from our major cities? The answer has to do with the coercive nature of politics.

Politics is a zero-sum game. The winning side gets the spoils, the losers get nothing. Of course, the typical voter actually gains little; indeed, he loses the tax money that goes to pay off the politicians’ friends and supporters, Perception, however, is more important than reality when it comes to voting. Voters believe that candidates of their own race will “take care of their own,” so they vote accordingly. Racial tensions therefore are inflamed when an election pits a white candidate against a black candidate.

It is important to contrast the divisive nature of politics with the integrating nature of free markets. In recent mayoral elections in Chicago, the majority of blacks voted for the black candidate, and most whites voted for the white candidate. But in their daily shopping, how many people patronize only members of their own race—or restrict themselves to goods that were made by a particular ethnic group? Any person who makes such a choice will deprive himself of an opportunity to get better products or services from merchants of another race.

The integrating effects of markets can be observed every Sunday and Tuesday during the summer at Aqueduct Race Track near my home in Queens, New York. On those days, the parking lot of the racetrack is host to a huge flea market. The track is located in a racially troubled area of South Queens, 10 minutes from Howard Beach, site of a racial attack in December 1987.

Yet, every Sunday and Tuesday, people gather from all over the area to buy a wide variety of merchandise. Customers and merchants represent just about every racial, religious, and ethnic group, and are drawn from every social class. Immigrants from India and Korea mix freely with native blacks, Jews, Italians, and others. The merchants haggle with the customers over prices, and the exchanges sometimes get heated, but in the many years that I have been going to the flea market, I have never seen anything more than harsh words exchanged, and security is minimal.

The Mutual Benefits of Exchange

Why are such diverse people able to get along so well? Could it be that people who go to flea markets are drawn from a more tolerant group than the public at large? Of course not. The flea market brings together about as random a cross section of the population as you can possibly find. I have no doubt that many of the people who frequent the market harbor deep racial hatreds. So why don’t these tensions ever blow up? The answer is that the flea market, unlike the political arena, brings people together for their mutual interest.

In a free market, exchanges are made only when each side believes that the exchange is in his best interest. The fact that everyone at the flea market, black and white, rich and poor, benefits from being there is a powerful incentive for people to forget their differences and get along. In the process, racial tensions are reduced, as a wide variety of people are able to observe each other close up and see how foolish stereotypes and hatred are.

Contrast the natural amity of the market to the natural discord of politics. In politics, the side with majority support wins, and forces the unwilling minority to go along. This can’t help but cause bitterness and resentment on the part of the minority towards the majority. Moreover, because politicians have so much power over the everyday lives of individuals, minor political incidents can cause major upheaval.

For example, Steve Cokely, a black resident of Chicago, publicly claimed that Jewish doctors are infecting black babies with the AIDS virus. Normally, Mr. Cokely would be dismissed as a crank, and that would be the end of it. Unfortunately, Cokely was an aide to Acting Mayor Eugene Sawyer, who is also black. Jewish spokesmen demanded Cokely’s dismissal. Segments of the black community, wishing to express their defiance off the “white power structure” urged Sawyer not to “give in.” After some hesitancy, Cokely was fired, but not before black-Jewish relations were soured, at least in the public sphere. Thus, Cokely’s speech, which would have gained little attention if he had been a private citizen, had grave consequences because of the divisive nature of power politics.

It is unfortunate that most of the leading advocates of improved race relations in the United States have been proponents of increased government intervention in the marketplace. As we have seen, free market forces naturally lead to integration and color blindness, because individuals find it in their self-interest to put aside their prejudices. When it comes to politics, however, that same serf-interest leads to racial tensions, as each group tries to improve its standing at the expense of other groups.

Relations among individual members of diverse groups are steadily improving, as people see the foolishness of discriminating in the private sphere. But as the public sphere grows ever larger, those gains are limited by political tensions. The shrinkage of government in favor of markets would do much to increase racial harmony in American cities. If you don’t believe it, come to the parking lot of the Aqueduct Race Track this Sunday.