20 May 2010

CRA 64

I was reflecting on this and I think the problem here is that economic rights don't always take into account social and cultural norms that underlie those rights. People are supposed to pay their debts. There isn't any law that requires you to do it (in theory you can get out of paying almost anything, for instance just walk away from a mortgage and if you've little equity in it the only loss is the property and moving expenses), you're just supposed to honor your obligations when you take credit lines from somewhere. There are legal and economic penalties. But really, how bad is a black mark and hit on your credit score compared to potentially tens of thousands of dollars in medical bills that you can't pay, or hundreds of thousands on a mortgage you can no longer afford (and which the bank strangely decided you were good for). We don't use debtors prisons anymore to handle this, so the penalties are pretty mild. And yet most people try to pay their debts. That's an important element in a society based on credit and lending for growth.

So when it comes to private businesses and properties establishing their rules, it's not quite enough to say, well the private business can do what they want on their terms because if he does something stupid, say, discriminate against Africans or Mexicans or Koreans, the market will punish him. Actually it might. If there are enough people willing to buck cultural or social norms or his bigoted behavior is an outlier. But if the cultural and social norms are enforced, even to the point of using violence or the mere threat of it to compel them, alongside legal challenges, harassment, and penalties for noncompliance from law enforcement, both against the potential customer and the owner or operator of a business, then those social and cultural norms will go uncorrected. Now in a relative way, these local rules offer penalties and blow back against the local society and culture that imposes them versus cultures that do not. Money and skills offered by discriminated minorities may flee the area for more tolerant climes, or even form their own segregated clans to compete against the intolerant ones. In a world where such exits are easily made, this is probably fine. We don't (and didn't) have a world like that throughout the Jim Crow South. The problem wasn't necessarily that there were no laws forbidding private discrimination. The problem was that there were essentially norms and laws that enforced private discrimination whether people wanted to do it or not; there was no right of exit. That's why there was a law installed, to alter the social and cultural dynamics because the market can not behave in its usual way to offer such competitive norms in an environment that enforced only that set of rules that forbade competition. For example, not only was it more or less the case that a black man could not do business properly alongside whites as an equal consumer, he could not form his own competitive industries to serve in contrast to those to offer non-discriminatory or his own segregated businesses. White on black racism was institutionalised as acceptable, the reverse was not. This is not a tenable manner to operate a market economy consisting of a diverse set of peoples.

In the abstract theoretical world, the problem that Rand Paul lays out isn't really that the private business owner is now enslaved to the government which will tell him who he may conduct business with and on what terms (with his ridiculous guns in bars example as somehow equated to raw and naked bigotry). The problem is that the society as a whole surrounding that business tells the private business owner who he may conduct business with and on what terms. He already does not have private control over his own business. Under those terms it makes the most sense to offer a level and equal playing field, where any consumer or business owner may contract with any of their opposite, without meaningless superficial discriminatory elements factoring in (leaving business related decisions like credit worthiness, established in a somewhat racially neutral way like credit scores).

2 comments:

Tragedy101 said...

There was an exit for Jim Crow South: voluntary exile to the North, West, or Mexico.

I don't think that societal norms can be legislated effectively. Societal norms are derived from educators: Family, school, and church. Not from the government, except in as far as the goverment seizes control over (or control in the stead of) one or more of these "societal institutions" of learning.

Sun Tzu said...

Voluntary exit was inefficient in this case. For example, the North experienced no great acceptance of the influx of black labourers and passed minimum wage laws in large part to discriminate against such workers at the behest of organised labour. I suppose you could have gone to Mexico, but economic opportunities there were pretty uniformly bad regardless of your race. And in that instance, we would be essentially depriving America of a vast potential human capital resource for the sole reason that we did not approve of skin colours that surrounded it. This seems like a grave injustice and a significant economic penalty to incur for the purpose of not interfering with cultural norms.

In this case, I think a strong argument can be made that societal norms have shifted only because of government intrusion in seizing some of these institutional controls. There may be a strong case that these shifts are in some ways inefficient themselves. For example, essentially fostering the growth and expansion of identity politics rather than destroying it, but it does seem pretty clear that overt systematic racism or oppression of any minority group by the tyranny of a majority, with or without official sanction through government mandates like Jim Crow, in some sense requires some interventions from other institutional authorities and the strong cultural currents they can provide in order to alter the dynamics involved. If those interventions can be done by removing right of exit/entry barriers that cultural norms have provided, so much the better. I would have preferred that was all that was necessary myself. In other words, the best case scenario might probably have been to allow people to discriminate within their business or hiring practices, but not permit those same people to force others to do so as well (and compel local law enforcement to reduce violent or threatening coercion against either company rather than to deploy it themselves). The downside risk here is that these cultural norms were extremely powerful. Businesses that served equally were likely to suffer economic hardships rather than prevail. In some sense, a period of legal requirement may be appropriate to moderate these norms such that competition progresses normally. It is however far from clear that this has been effective in all or even any culturally useful areas. Schools for example in the south are spotty at best as far as integration goes, as are many churches, and interracial marriage is still frowned upon most in the South, meaning significant cultural racial barriers still exist.

Still, I'm not convinced that sitting by idly with no legal intrusion was the right call in the case with the CRA/Jim Crow dynamic simply because human nature appears to be rather less pleasant and altruistic than is commonly believed. I have a lot of trouble with the idea that a government should have the power to tell people who they can and cannot do business with, who they can and cannot hire, and so on, even at the abstract level, but at the same time I find it abhorrent that societies could do the same and attempt to enforce such norms upon people who do not share them.