Discrimination is Bad Business-A Libertarian View

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Few things create more emotional reactions than discrimination in the workplace. There is an idea that discrimination is always bad and that business is eager to practice it. First discrimination should only be considered an issue at all if it is arbitrary. To be technical all the word “discrimination” means is the making of a choice. When a consumer chooses to buy Jiff brand peanut butter instead of Skippy or Peter Pan they are discriminating against the brands not purchased. Such decisions are usually not arbitrary. The consumer may be buying a brand because it is cheaper, better tasting, or includes some healthful ingredients. In all of these choices the consumer is making a rational choice based on the criteria that are important to them. To choose a brand because it has a pretty label might not be so rational. People who routinely make decisions based on such arbitrary criteria are not likely to end up with the array of products that best meet their needs.

Stripped away from the emotions that issues relating to the hiring, salary, and promotion of employees in business create, the decisions are not fundamentally different than those made by consumers of peanut butter. Rational criteria that relates to the goals of the business are needed to make such decisions. In hiring one looks at education, experience, and references. In promotion and salary, work record and performance come into play. Employers discriminate when they hire employees with a better work history or educational background. This is rational. Those who set arbitrary criteria based on things like race are undermining the success of their enterprise. This should seem so obvious as to be accepted as an absolute truth of the market place. Only a massive misdirection of the market away from the profit motive can undermine it.


In the U.S. prior to the 1960s racially discriminatory policies were widespread. Since this is contrary to the best natural interests of business other factors had to have existed. First, the racial attitudes that were reflected in employment were those of the community at large. Second, employers who did not follow discriminatory practices could create negative backlash from their customer and client base. Third, in many areas discriminatory practices were supported by statute. Fourth, there were armed vigilantes running loose in some parts of the country to ensure that this type of discrimination was upheld.

The 1950s and 1960s saw a movement to ensure civil rights for all Americans regardless of race. Strictly speaking civil rights refers to the public rights we have such as the right to free speech and to vote. Federal acts were initiated to ensure these rights were not denied to any citizen. The need to extend rights to the voluntary behavior of individuals in the market place was also asserted and further laws passed. Since the 1960s other groups have identified themselves as needing statutory protection against discrimination in the private sector. For the record Libertarians strongly support the rights of all citizens to participate in the civic life of their communities. Libertarians oppose government discrimination based on any arbitrary groupings such as race, gender, or sexual orientation. Libertarians are not comfortable with government dictates to the private sector. The interesting issue here is how necessary and how functional are the anti-discrimination laws that government has imposed on private sector employers.

I suggest that widespread arbitrary discrimination by business can only exist as a reflection of the popular will. The business world does not operate in isolation from the society it serves. If the goodwill of business within the community is harmed by discriminatory policies those policies will be selected against in a competitive business environment. If discrimination is the expected norm many businesses will discriminate. The problem is that a society that supports discrimination is unlikely to support politicians that will pass laws to end it. Legislators and business respond to the same public. So anti-discrimination legislation is usually passed only at a time when the normal forces of the market place are well on their way towards addressing the same problem. Any minority that remains a pariah in the eyes of the public will face both discrimination from business and hostility from elected officials. So the people most likely to be victimized by arbitrary discrimination are the least likely to have government protection.

The people who have passed various anti-discrimination laws give those laws enormous credit to ending the discriminatory practices they were aimed to address. These people almost universally fail to understand how the forces of the market place and the attitudes of the general public towards discriminatory practice guild the hands of business. They see business as evil and fail to realize the enormous power that public exposure of unpopular discriminatory policies can have in directing business decisions.

The over reliance on statutory relief for workers who feel they have been victimized by discriminatory practices creates a new set of problems. Employers may be afraid to take legitimate action to terminate a problem employee in fear the employee may decide said action was based on some illegal form of discrimination. Employees will seldom see their own fault in any action against them to begin with, add paranoia about minority status and you have a recipe for spurious law suits.

Being a minority member myself, and familiar with some cases of grievous discrimination against persons I know, I can attest that there are hard headed and hard hearted employers who still engage in such practices. Any of you who have felt the pain of discrimination know how hurtful it is. My point is to remind all of us that those who cause this hurt also hurt themselves in the process. They will limit the universe of available employees and put themselves at a competitive disadvantage in the process. The only thing that