Friday, June 24, 2011

Walmart and discrimination

Earlier this week, the Supreme Court unanimously threw out a massive class-action sexual-discrimination lawsuit against Walmart. By overruling a lower court's decision, the Supreme Court raised the barrier to future legal challenges against large corporations. As might be expected, probusiness outlets defended the ruling, while advocates for women and minorities lamented it.

In the present article I won't discuss the specific legalities of the case, as I'm not a lawyer. Rather, I will argue that standard libertarian theory says that there should be no such things as laws against "discrimination," because they are illegitimate infringements on property rights. Furthermore, in practice such laws are completely arbitrary, as it's impossible to actually avoid discrimination. The free market provides the built-in penalties for practices that most people have in mind when they want the government to punish "discriminatory behavior."

Taking Property Rights Seriously

The standard libertarian objection to "antidiscrimination" legislation is that it infringes on the exercise of property rights. If you own a business, you should have the legal ability to hire whomever you want.

The principle is straightforward enough when it comes to property rights in a personal setting. For example, even people who support laws against business discrimination would probably shrink from saying that (say) a racist homeowner has to invite black people to his barbecue on the Fourth of July. Most people are content to say that the homeowner is a jerk and should be shunned by polite society, but his house is his property, and the government can't literally force him to host people against his will.

Even in a business setting, people's intuitions can change when the tables are turned. As this video demonstrates, many people don't think a black restaurant owner should be forced to serve someone in the KKK. But surely it would be discriminatory to allow approved groups to enjoy wider latitude in the use of their property.

As with most hot-button political issues, there is no conflict between pure theory and pragmatism in the context of a free market. Even if the reader isn't moved by an appeal to the rights of business owners, the remainder of this article will argue that the free market has incentives to "punish" just the sort of discrimination to which most people object.

Getting Warmed Up: Does All Discrimination Seem Bad?

I am ultimately going to argue that the free market provides a financial penalty for the business behavior that antidiscrimination-law advocates think should "obviously" be illegal. But before I can make that point, we need to zero in on the specific practices that people have in mind when they use the term "discrimination." As we'll see, there is a whole host of hiring practices that most people endorse or at least tolerate, even though they are quite clearly discriminatory.

Consider the role of Virginia Woolf in the movie The Hours. As it turned out, Nicole Kidman landed the part. But suppose that Dustin Hoffman had showed up to read for it before that decision had been made. We can imagine the casting director being baffled and embarrassed, explaining, "I'm sorry Mr. Hoffman, but you just don't seem right for this part."

Hoffman could press for details. What specifically was wrong with his performance? After all, he had consulted with several female novelists and read extensively about Virginia Woolf. He really thought he nailed the scene they'd just read. And don't tell him he can't play a woman — he did a great job in Tootsie.

Of course, the casting director would explain that this is just silly. Dustin Hoffman couldn't possibly play Virginia Woolf in The Hours, because, well, he's a man. End of story.

Now, does anybody recoil in horror at that clear-cut example of "sexual discrimination"? Maybe a few hardcore feminists and some others, but most people wouldn't. They would say, "Come on, Murphy, you're being absurd. That's not the kind of thing we're talking about."

Let's consider a different example. Female coal miners (at least in one community) represent only 2 percent of the workforce, even though they are roughly half of the population. So that constitutes rampant sexual discrimination against women, right?

Again, not really. Most people understand that there are other factors driving that huge disparity. Some of the huge overrepresentation of men in coal mining might be due to sexist bosses, but before leveling any accusations against them, we would need to carefully control for those other factors.
Mises Academy: Robert Murphy teaches Keynes, Krugman, and the Crisis

Last example: If we went to all the Outback restaurants around the country, and rounded up (a) the women who were assigned to be hostesses, greeting people at the door and (b) the women who were assigned to be dishwashers, would we notice any patterns in their physical appearance? I'm going to go out on a limb and say that the first group would be a lot more attractive, as conventionally defined.

So is this yet another case of rampant and outrageous bias on the part of business owners? Why aren't Americans up in arms over this discriminatory policy? In fact, what's the story with all the beautiful movie stars?

The reason most Americans are perfectly happy with these latter examples of discrimination is that it's what they want. Most Americans don't have a particular preference for having a man versus a woman ring up their groceries at Walmart, and so they take claims of sexual discrimination seriously. But Americans on net do have a preference to be greeted at the door of a restaurant by a young, pretty woman, and that's why restaurants cater to that preference. This also explains why movie producers are willing to pay millions of dollars to gorgeous stars, even though less attractive thespians could give "the same" performance for much less money.

What People Mean by Bad Discrimination

In light of the above examples of what most people would not include when they demand that government crack down on "discrimination," we can define the objectionable practice this way: business engages in unfair discrimination when it treats employees differently even though this differential treatment has no basis in profitability.

Even though the typical American might not think of the issue according to the principle I've just stated, I think it adequately captures most of their intuitive judgments regarding acceptable versus "bad" discrimination. To repeat, most Americans object if a woman (say) is treated differently by her bosses even though her being female "has nothing to do with the job." The only clarification my principle adds is to precisely define what we mean by "having something to do with the job" — namely, contributing to the business's profitability.

For example, the principle explains the intuition most Americans have that it is acceptable for Outback to exhibit a strong preference for young, pretty women as hostesses, while it is not acceptable for a corporate manager to only hire young, pretty women as executive assistants. The first seems like standard business practice to most people, while the second seems like "unfair discrimination."

If analyzed, the reason for this different intuition would boil down to the fact that hiring pretty women as hostesses actually is a "business decision" catering to customer preferences, whereas hiring pretty women as midlevel executive assistants is a "personal decision" catering to the manager's preferences. The first practice makes the company more money, while the second squanders it.

The Free Market Automatically Punishes "Bad" Discrimination

Now that we've come this far, it's a simple step to prove that the free market automatically punishes "bad" discrimination. Unlike under government laws, here there is no chance of a guilty party escaping his or her punishment — and the punishment itself is exactly proportional to the severity of the "offense."

Let's take a concrete example. Suppose that there is an opening for a managerial position at Walmart with a salary of $75,000. The interview process has settled on two candidates: a woman who would contribute $85,000 per year in extra profit (not counting her salary) to Walmart, versus a man who would contribute only $80,000 per year.

Further suppose that because of their corporate culture, the executives at Walmart just can't see this reality. Instead, they falsely believe that the woman will end up quitting her job after a few years to raise a family — even though she wouldn't. Walmart thus promotes the man and leaves the woman at her current position stocking the shelves with cereal.

Now what would happen to Walmart in this scenario in a truly free market? It's true, no government judge would award damages to the woman if she filed a lawsuit. However, in a very real sense, Walmart has been "fined" $5,000 in potential profits. If it had promoted the (better) female applicant, its net income would have increased by $10,000. Instead, its biased decision only yields an increase in net income of $5,000.

Interventionist critics might retort that this is hardly an incentive for Walmart's owners to put in place policies to weed out such bias. But these same critics, in other contexts, accuse big business of perpetrating all sorts of evils in the blind pursuit of profit. Are companies willing to outsource jobs and sell unsafe products for money, but unwilling to stamp out discrimination by their managers for money?

The story doesn't end there. If the discrimination is severe enough, then not only does Walmart (still) automatically "lose" the potential profits, but there is a large opportunity for competitors to hire away its underpaid workers — where "underpaid" is defined in reference to the workers' actual productivity. For example, if it really were true that hundreds of thousands of women were being systematically underpaid by Walmart, then Target and other stores could reap an enormous advantage by offering slight pay raises and inducing them all to quit.

It's true that in the real world, things are more complicated than the simple stories above. For example, a woman who has worked 20 years at various departments in Walmart would be more productive as a manager at Walmart than she would be at (say) Target. Therefore, the alleged gap in her salary would need to be quite large before it made sense for her to switch stores.

"As a matter of property rights, business owners should be able to legally "discriminate" just as private homeowners can."

Nonetheless, the point remains: if employees are being systematically underpaid in a firm, there is an automatic incentive for other companies to bid them away. Moreover, in the long run new workers will flock to the firms that have a reputation for fair promotion and salary practices. If it really were the case that women at Walmart eventually hit a glass ceiling, then young women considering a career in retail would need a higher starting salary from Walmart to convince them to work there rather than for a competitor.


As a matter of property rights, business owners should be able to legally "discriminate" just as private homeowners can. In practice, there are all sorts of clearly "discriminatory" practices to which few people object. Once we precisely define what we mean by "bad" discrimination, we see that the free market contains automatic financial penalties for it. There is thus neither a right nor need for government intervention to remedy unfair discriminatory practices.


Burglar stabbed to death in Britain: Father and son arrested on suspicion of murder

A father and son were being questioned by detectives last night after a suspected burglar was stabbed to death as he broke into their family home. The death comes only days after David Cameron vowed to protect the rights of homeowners to defend their property.

Peter Flanagan, 59, and his son Neil, 27, were asleep upstairs when four masked men forced their way in through the back door of their terraced home. They awoke and confronted the gang and during a violent struggle one balaclava-wearing intruder was stabbed. His three accomplices helped him as he staggered 200 yards before collapsing.

Alerted by a 999 call from the Flanagan household shortly before midnight on Wednesday, police dashed to the scene to find the intruder lying in the street in a pool of blood. The 26-year-old suspected burglar, who has not been named, was taken to a nearby hospital where he was pronounced dead.

Police returned to the £120,000 two-bedroom Victorian home in Salford and arrested Mr Flanagan, a garage worker, his son, a builder, and Neil’s 21-year-old girlfriend.

They were in custody last night, being questioned by detectives on suspicion of murder. Earlier this week, Mr Cameron said: ‘My mission is to make sure families can feel safe in their homes. The first duty of government is to protect people. ‘We will put beyond doubt that homeowners and small shopkeepers who use reasonable force to defend themselves or their properties will not be prosecuted.’

But Shami Chakrabarti, director of civil rights group Liberty, said: ‘This is a problem not of law but the public understanding of it. ‘Of course people facing intruders can use reasonable force to defend themselves. ‘But saying that “burglars leave their rights at the threshold” is a recipe for vigilante execution and mistaken killings of family members returning home after dark.’

Asked about Mr Cameron’s comments, Chief Superintendent Kevin Mulligan of Greater Manchester Police said: ‘I would tell people to ring the police and use reasonable force, but I don’t want to enter into a legal debate.’

Mr Flanagan’s wife Valerie, who moved out of the home in 2000, was not at the property at the time. She said: ‘It’s such a terrible incident. How anything like this can happen to anyone I don’t know. My husband is a great man and a great father – it’s such a shock.’

One neighbour said: ‘They’re just a normal family and I would never have expected in a million years that they would have been caught up in anything like this. ‘I’ve known the young lad Neil since he was born and I’ve known the family for years.

‘If what people are saying is right then I think it’s perfectly understandable if Neil and his father stood up against a gang of burglars. I would have done the same thing to protect my own family.’


Planned Parenthood Funding: James Madison vs. Obama and the Progressives

How unsurprising to find Leftists on the side of killing. They've got a lot of form there -- from the French revolution on

With a critical vote in its state Senate, North Carolina has voted to de-fund Planned Parenthood. Republicans hold a huge majority in the Senate—meaning, as a Republican majority usually does, that the Senate is pro-life. The governor of the state, Bev Perdue, is a Democrat—meaning, as a Democrat chief executive usually does, that the governor is “pro-choice,” and favors funding Planned Parenthood. Enough Republicans exist in the legislature to over-ride Perdue’s veto.

Prior to this vote, North Carolina infused Planned Parenthood with $434,000 annually, directed at state “family-planning programs.” That money was to go to “non-abortion services;” that is, “non-abortion services” by the nation’s largest abortion provider.

Most significant, North Carolina’s action signals a potential trend among states. It is the third state to vote to de-fund Planned Parenthood, following measures by legislatures in Indiana and Kansas, where the governors are Republicans and supportive. In Kansas, the governor is the solidly pro-life Sam Brownback, a gigantic change from Governor Kathleen Sebelius, who is now President Obama’s point-person to revamp America’s healthcare system. In Indiana, the governor is Mitch Daniels.

In all three states, North Carolina, Kansas, and Indiana, we see yet again how the Republican Party has become the pro-life party and the Democratic Party—the party of my family’s roots—has continued in the opposite direction.

The next key thing to watch is how the Obama administration reacts to North Carolina. In recent weeks, the Obama administration moved to deny Indiana’s de-funding of Planned Parenthood. Indiana sought to remove the millions of dollars in subsidies Planned Parenthood received in federal funds (via the Indiana government) through Medicaid. The Obama administration told Indiana that it can’t do that, arguing that federal Medicaid law prohibits states from barring certain “health” providers “because of a provider’s scope of practice.”

That said, here’s the big picture:

It’s critical to comprehend the Obama administration’s position. It needs to be understood. It represents not merely a policy or partisan divide but an ideological chasm over the very function of government and balance of powers.

Among liberals/progressives, we see here not only an obvious embrace of the Planned Parenthood worldview, but the bitter fruits of a much longer march, pre-dating Planned Parenthood, to centralize power and control in a single government based in Washington, along with a corresponding removal of authority from states and localities. This is a debate as old as the republic itself. It dates to the 1780s: the Articles of Confederation, the Federalist Papers, Jefferson and Hamilton and Jay and Madison, the Constitution. Our Founders vigorously debated the proper balance of powers between states and the federal government, trying to avoid extremes in either direction. They did not want an imbalance where Washington slowly but surely subsumed powers that not only rightfully belonged to states but better served citizens in the hands of states.

To place this in a theological perspective, this is somewhat similar to the teaching of subsidiarity. When it comes to assisting citizens in need, whether through poverty programs or healthcare, subsidiarity encourages localism to the best extent possible. The essence of subsidiarity is that localities, whether public or private, from counties to churches, are closer to the problem; they provide a more efficient, human touch than a distant bureaucracy—and can do the job better than a one-size-fits-all source in Washington. Subsidiarity opposes collectivism and sets limits on state intervention.

I view subsidiarity as somewhat of a reflection or extension of James Madison’s so-called “Middle Ground.” Madison was mindful of a careful balance between state and federal power. Though he was at times a strong proponent of federal power, he warned against excesses in either direction. Though subsidiarity isn’t exactly the same thing, it, too, is about striking the best balance, and not over-centralizing things in Washington.

Sadly, progressives have long pushed for government powers almost solely in the federal direction. Healthcare and Planned Parenthood’s “services” are just the latest manifestation. Thus, they are apoplectic at the Obama administration—and throughout the halls of power in the Democratic Party—by any move by any state to de-fund Planned Parenthood. They are already greedy for federal power. They are already greedy for “abortion rights.” So, to have states getting in the way of their attempts to ensure federal funding of Planned Parenthood is nothing short of cultural Armageddon.

Watch these current actions closely, in North Carolina, Indiana, and Kansas, with more to come. Observe the ongoing hysterical response (click here for examples) of liberals/progressives, from the Obama administration to Democrats like Nancy Pelosi and Barbara Boxer. Their reaction says a lot about these folks, not only about their views on cultural issues and human life but on the very essence of government.


Australia: Victory for freedom of association

Hells Angels bikie member wins challenge to NSW gang law

BIKIES have scored a victory over the New South Wales Government, securing a High Court ruling that a tough law designed to break up their clubs is invalid.

The High Court ruled today that a Hells Angel's challenge had been successful and the NSW law had been declared invalid, a registrar at the High Court in Canberra said today. The NSW Attorney-General's office confirmed the decision.

The NSW Government introduced the Crimes (Criminal Organisations Control) Act in 2009 following the death of Hells Angel associate, Anthony Zervas, during a violent brawl at Sydney Airport.

The law allowed the police commissioner to ask a NSW Supreme Court judge to declare bikie gangs criminal organisations and then seek control orders banning individual members associating with one another.

Derek Wainohu, a prominent member of the Hells Angel Motorcycle Club, launched a bid in 2010 on behalf of Sydney chapters of the club to have the law declared invalid.



Political correctness is most pervasive in universities and colleges but I rarely report the incidents concerned here as I have a separate blog for educational matters.

American "liberals" often deny being Leftists and say that they are very different from the Communist rulers of other countries. The only real difference, however, is how much power they have. In America, their power is limited by democracy. To see what they WOULD be like with more power, look at where they ARE already very powerful: in America's educational system -- particularly in the universities and colleges. They show there the same respect for free-speech and political diversity that Stalin did: None. So look to the colleges to see what the whole country would be like if "liberals" had their way. It would be a dictatorship.

For more postings from me, see TONGUE-TIED, GREENIE WATCH, EDUCATION WATCH INTERNATIONAL, FOOD & HEALTH SKEPTIC, GUN WATCH, AUSTRALIAN POLITICS, DISSECTING LEFTISM, IMMIGRATION WATCH INTERNATIONAL and EYE ON BRITAIN (Note that EYE ON BRITAIN has regular posts on the reality of socialized medicine). My Home Pages are here or here or here or Email me (John Ray) here. For readers in China or for times when is playing up, there is a mirror of this site here.


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