Rationalizing White Supremacy: Racism, Free Markets and the Morally Obtuse Rand Paul

By Tim Wise
May 23, 2010

Although he insists he wasn’t named for the emotionally deranged, greed-loving, altruism-bashing author, Ayn Rand, U.S. Senate candidate Rand Paul’s views are just a little too similar to those of the mother of Objectivism–as are the views of his father, libertarian Congressman Ron Paul–to take seriously his denials. Either he is lying about the origins of his name, or else his chosen nickname is the biggest coincidence in the history of chaos theory.

And so last week we have the Kentucky Republican regaling the nation with his ill-conceived view that although he finds racism deplorable, he believes that the rights of private businesses to discriminate on the basis of race and indulge their racism is sacrosanct. Thus, the government should not make such actions illegal. Meaning that the Civil Rights Act of 1964, in regulating private as well as public discrimination, went too far. In other words, Martin Luther King Jr. and the rest–though Paul claims to be a great admirer of their work and swears he would have been marching with them had he been old enough, unlike, ya know, every other libertarian at the time–were all wrong.

Although Paul has now backed away from this position–originally articulated in an interview with a Louisville newspaper and then on the Rachel Maddow Show–it is hard to take the retraction at face value. After all, a hands off approach to pretty much everything private businesses do is the hallmark of libertarian thought. And Rand Paul is indeed a libertarian, raised and nurtured by his libertarian dad, who also has criticized the Civil Rights Act, and who published personal newsletters with blatantly racist attacks on blacks all throughout the 1990s. Fruit, meet the tree from which thou hath fallen, but not far.

While Paul may seek to walk back his endorsement of allowing private discrimination, others of his ilk, brought out of the woodwork as a result of the brouhaha–like pseudo journalist and all-around free market shill John Stossel–are sticking with Paul’s original position. Indeed, Stossel, in defending Paul said the Kentucky Republican hadn’t gone far enough. While Paul had only suggested he would have tried at the time to remove those portions of the law regulating private businesses–especially Title VII–Stossel says we should actually repeal those parts of the Act right now.

While many have expressed outrage at Paul and Stossel’s remarks, that anyone would find them surprising suggests how little most understand the morally obtuse theory that is libertarianism. Fact is, this is how market-worshippers think. To their way of understanding the world, unfettered capitalism can resolve all moral dilemmas because, after a while, those engaging in destructive activities will be made to pay for their transgressions. This is because consumers will eventually cease indulging the capitalists’ taste for the destructive activity. When consumers withhold their money from capitalists, as a way to vent their outrage over the given evil–be it discrimination, pollution, exploitation of child labor, or whatever else–the capitalist will change his or her ways because it has ceased to be profitable to do otherwise. Additionally, when it comes to discrimination, racist or sexist employers will eventually come to recognize their error, because less biased competitors who are willing to hire persons of color (or women of all colors) who might be better qualified, will reap profits that were sacrificed by the discriminating employer. Eventually, lessons learned, employers will stop discriminating even if they don’t much like blacks, or Latinos, or whomever, because however much they may hate racial, gender or sexual “others,” they love money more. And according to libertarians, everyone operates on the basis of material self-interest.

But aside from the exciting world of college dorm-room debates and online chat forums (where libertarian theory always makes a lot more sense than in the real world), there are any number of problems with the market fundamentalism preached by the Paul family, John Stossel and the fine folks at Reason magazine. These are both practical and moral concerns, and on both levels, libertarianism proves itself to be a theory in search of even a modicum of rational thought.

The Practical Flaws of Relying on the Market to Solve Racism

To begin, even if we were to accept the notion that a totally free market could eventually correct the problem of racism, and for exactly the reasons stated by Paul and Stossel, the fact remains that there has never been a totally free market. Nor would one exist were we to, as Stossel recommends, repeal Title VII. Thanks to other government interventions in the market, which prop up private businesses and insulate them from the consequences of their actions–whether “Too big to fail,” various subsidies, preferential tax concessions, limited liability protections, or the prohibition of sympathy strikes by workers, among other examples–America is a place with virtual socialism for the owning class and capitalism for everyone else. So if we got rid of prohibitions on private discrimination, and yet all the other public support for private enterprise remained in place (as it would), businesses would not, in fact, “eventually” be forced to pay for their hurtful actions. Or if they were, that “eventually” would be an awfully long way off: too far off, indeed, to be considered a just or moral outcome. As John Maynard Keynes once noted about the idea that markets work out best for everyone in the end: “In the long, we’re all dead.”

Looking one at a time at the two kinds of private discrimination illegalized by the Civil Rights Act, we can see rather quickly the fallacy in the libertarian position. First, let’s examine public accommodations–restaurants, hotels, and stores that sell goods to the public–to see if, practically, the market alone could have solved the problem of racism, so ingrained at the time of the Civil Rights Act’s passage.

Racism in Public Accommodations

According to persons like Stossel and Rand, owners of these businesses have a right to discriminate, since, after all, the business is theirs. Although refusing to serve blacks was morally repugnant, it is, to their way of thinking even more so to tell those business owners how to dispose of their property, be it a milkshake, a dress, or a hotel room for the night. And besides, they claim, precisely because the act is so morally repugnant, the market could have taken care of the bigoted behavior, once black consumers and perhaps their white allies boycotted the business and elevated the cost of the business owner’s racism beyond an acceptable level.

But anyone with even a fleeting knowledge of history can see how unlikely this scenario would have been in the early 1960s. Racist thinking was so entrenched at the time–and whites, especially in the South, were so committed to the maintenance of segregation–that businesses could have easily maintained profits on the backs of white racist patronage, or simply the business of whites who were ambivalent about segregation, even if not committed to bigotry. Many whites who were not themselves overtly prejudiced nonetheless saw little wrong with segregation and would likely have continued to patronize racist businesses once the immediate heat of, say, a sit-in had died down.

The likely failure of market pressure to have made a difference in those days is all the more evident when you consider the lopsided economic clout of the white community relative to communities of color. In places like Mississippi, Alabama or South Carolina, one might have thought (in keeping with market theory) that segregation would have failed on its own, precisely because blacks were always such a large percentage of the population (in some towns roughly half). After all, no business would want to take the chance of offending such a large potential market share, or simply losing that much potential patronage. But black folks didn’t have (nor do they have now) economic clout that is anywhere near commensurate with their percentage of the population. Even now, for instance, the average black family has only about one-twelfth the net worth of the average white family. In the early ’60s those gaps were likewise huge and allowed racist owners to ignore the needs and desires of large percentages of their community because they neither wanted nor especially needed their business.

To this a libertarian might respond that within a few years, as racial views liberalized, those businesses would have changed their practices anyway, even without legal force. But in fact, personal views often trail institutional practices and legal norms, rather than the other way around. Most people, for good or bad, are relatively conformist vis-a-vis the larger social order. So when the norm–allowed by law–was segregation, most whites went along with it, irrespective of their own levels of racial hatred. Likewise, after the state moved to formally prohibit discrimination, views towards overt segregation and overt racial hostility transformed quickly. Although subtle racial bias is still widespread according to the available evidence–and racist stereotypes all too common–it wasn’t long after the passage of civil rights laws that whites began to express opposition to the blatant manifestations of racism that had been formally embedded in the society just a few years earlier, and to which they had never previously objected. In other words, it may well have been because the state stepped in, that attitudes began to liberalize. Had the government maintained a hands-off approach, blatant racism would have remained the normative condition, and most whites would likely have continued to accede to it.

Although today, it may well be the case that overt racism in public accommodations would be heartily rejected by most consumers, including the vast majority of whites, there is no reason to assume that rejection would have come about naturally as part of some human evolutionary process to enlightenment. Rather, the state, by forcing a new legal norm, helped facilitate a new attitudinal norm. This is why white southerners became more supportive of integrated schools than whites elsewhere by the 1980s: because having been forced to desegregate, white folks in the southern states adjusted their perspectives to fit the new reality.

Although Stossel might claim that racial views are now liberal enough to repeal those portions of the civil rights laws aimed at private discrimination, the evidence suggests otherwise. Despite the shift in white folks’ willingness to tolerate blatant racism in public accommodations, high levels of bias remain, with as many as 60 percent of whites willing to admit to pollsters that they hold at least one racist stereotype about African Americans to be true, for instance. Further, in small towns and communities (where people of color or religious minorities are a tiny percentage of the population) in the absence of civil rights laws, market pressure alone would not likely suffice to prevent discrimination even today. Thus, not only was state intervention needed in this arena in 1964, but it is still needed in 2010.

Indeed, even with state prohibitions on racial discrimination in housing, upwards of two million cases of such discrimination occur annually, depriving people of color of tens of billions of dollars in home equity and wealth. Most of this discrimination goes unpunished due to lax enforcement. That things would be even worse in the absence of laws compelling (at least in theory) some degree of equanimity seems apparent.

Racism in Hiring and Employment Opportunities

When it comes to employment discrimination in the private sector, libertarian thought is hardly more persuasive than in the arena of public accommodations. According to pure market theory, employers who discriminate will eventually lose money and thus change their ways. Why? Because to hire people for a merit-arbitrary reason such as color is to, almost by definition, overlook more talented possible employees. So when one’s competitors who are less racist hire the folks overlooked by the bigot, they will reap the benefits that come from hiring the more qualified workers, and eventually the racist will either get with the program or go out of business. But the flaws inherent to this set of arguments are legion.

First, the idea that people automatically respond to their rational material interest is not true. So even if the libertarian argument were correct in the abstract–that racism is ultimately bad for business–this wouldn’t necessarily alter racist behavior. After all, the whole history of racism in the United States has been a history in which white workers, for instance, regularly overlooked their absolute economic interest for the sake of furthering their perceived relative and racial interests. The labor movement would have been far better off had they not engaged in rampant discrimination against workers of color: wages would have likely been higher, as with benefits, and white workers wouldn’t have had to worry about the boss replacing them with black or Asian workers when they went out on strike (because the folks of color would have been on the picket line too). But in spite of their material interests as workers, they elevated racial bonding above those interests, opting for what W.E.B. DuBois called the “psychological wage” of whiteness: one that substitutes a sense of group superiority for actual tangible goods and income. If white labor has historically overlooked its self interest for the sake of racial bonding, why would anyone assume that owners might not do the same thing?

Second, the argument that discriminating employers will be taught a lesson if they overlook better qualified people of color presumes that the employer has access to the necessary information to come to that conclusion and then change his or her ways. And simply put, in very few cases would such corrective-after-the-fact information obtain. Think about it: If a black person applies for work with an insurance company, and the owner of the company, or the manager refuses to hire that person because of racism, what is the spurned applicant likely to do? Well, he or she might apply for work with a direct competitor of the racist company, and he or she might be hired by the second firm, thanks to that firm having a more open minded hiring policy. But so too, the black person rejected at the first company might seek employment in a totally different industry, in a different part of town, where their future performance with whatever company ultimately hired them would never come to the attention of the racist insurance manager. Without being able to literally see the performance of the person they passed up, there is no way, even theoretically, that the racist could be “taught a lesson” about the unprofitability of discrimination.

In fact, even if the spurned applicant did get a job with the direct competitor of the racist company–so that at least theoretically, his or her performance in the market might be something the racist would learn about, if only by virtue of the competitor proceeding to outperform the racist–in practice, there is very little reason to think that it would make much difference. To begin with, the marginal gaps in productivity between most workers in a given occupational strata are relatively small. In the instant case, for example, there is only so much “better” that one insurance adjuster is likely to be, relative to another. Even more so for less skilled positions.

So even if the spurned black applicant were to go to the competitor down the block and do a better job for that company than the white person who was hired by the first company was able to do, would the difference likely be large enough to stand out? And to make the first employer realize the error of his or her ways? Considering all the factors that affect private profits–of which labor productivity is only one, and typically not the most important–it is unlikely that racists would be taught anything in this process. This is especially true given that racists typically will go to great lengths to justify their biases, and thus, resist any information that might lead them to conclude they were wrong. In fact, and as I document in my newest book, studies have found that even when people of color perform equally to their white counterparts, or apply for jobs with more qualifications than whites, employers regularly prefer the less qualified whites anyway. So either employers aren’t very good at spotting merit, or they are willing to indulge their biases despite the potential costs.

One study in particular makes this point blindingly clear. Conducted in the late 90s by legal scholars Alfred and Ruth Blumrosen, the study looked at specific industries in specific locales and compared how companies within those industries and locales did in terms of their openness to hiring people of color and women of all colors. The study’s authors looked at tens of thousands of businesses. They determined what the average level of employee representation was for blacks, Latinos, Asians and women (as women), in each industry and locale. So, for instance, they might be able to ascertain from the data that in Houston, in the construction industry, African Americans were approximately ten percent of the workforce on average. They assumed for the sake of argument that whatever the local industry average was, was itself fair, and not reflective of discrimination (even though, arguably, there could be industry-wide discrimination in an area and field that drives down the averages across the board). Starting with that somewhat conservative assumption, they then looked to see if any firms were substantially below the local industry average, the argument being that if most firms are able to find, say, 10 percent black employees, most any firm in the industry in that town should be able to come pretty close to that norm. If a firm, on the other hand, only had, say, 5 percent or 2 percent black employee representation, that would suggest that something was likely wrong.

After carefully evaluating the evidence, the Blumrosens were able to conclude that while most businesses did not engage in demonstrable racial discrimination, about a third of all firms did. Indeed, over a million people of color and women of all colors were estimated by the study to experience job discrimination each year. And this was true in spite of the fact that these discriminating firms were operating in environments where some of their direct competitors were apparently more equitable in their dealings. Yet the fact that others were hiring more equitably was not causing the racists or sexists to go out of business.

Beyond Practicalities: The Moral Bankruptcy of Libertarian Thought on Race

But beyond all the practical limits of the market to correct for racism–and frankly it is almost nauseating to have to spend so much time debating the issue on those grounds–the bigger point is that libertarian conceptions of how to address racism, past or present, are so morally obtuse as to call into question the ability of market-worshippers to empathize at all with their fellow human beings.

Consider, for instance, the ramifications of libertarian thought in the medical profession (of which both Rand and his daddy Ron are a part). Under Paul’s conception of justice, and that of John Stossel, doctors working in private practice should be able to discriminate against patients based on race, religion, or for any other reason without limit. Meaning that if a person belongs to a group despised for some reason by the only physician in town–or simply the doctor they unluckily encounter in a life-threatening emergency–their very ability to continue living would take a back seat to the doctor’s “right” to dispose of his or her “property” as he or she saw fit. Though the physician would hopefully come down on the side of the hippocratic oath, in libertarian-land they wouldn’t have to. And if they decided to indulge their biases, well, too bad. That the patient could always go searching for another doctor who was less bigoted might be nice, and work just fine in the ether of textbook based hypotheticals. But in the real world–a world that libertarians fail utterly to comprehend even as I’m told they live somewhere within its physical boundaries–such a patient might well die, all so that the free market could remain unimpeded.

Back to the racial issue, to venerate the property rights of business owners, say, in the era of segregation–and thus to claim that it was inappropriate for the state to force them to serve blacks, or hire them, no matter how morally offensive racism may be–is to ignore that the accumulation of their property in the first place was in large measure due to having been protected by the state from competition all those years. If the government has consistently intervened, not only against people of color via state-sponsored racism, but in favor of whites via the same process, then the property over which white business owners came to have control (and which libertarians view as sacrosanct) was ill-gotten gain. To suggest the state, which was implicated in the unjust accumulation of that property by whites in the first place, now has no right to force compliance with public laws intended to provide equity of opportunity and access is perverse. It suggests that businesses can be subsidized by the state but not regulated by it, that individuals can reap the unearned benefits of state action but not be expected to bear any of the costs.

To bow to the private property rights of whites under segregation would have been to capitulate to the existing distribution of stuff at that time, which distribution had come about not in a free market, such that the distribution could be said to have been fair (under market principles), but rather, as a result of government intervention. It would have meant accepting government intervention of the first order (on behalf of whites), but then saying, after the fact, that there could be no corrective intervention on behalf of those deliberately oppressed. Not to mention, those stores and restaurants that were segregated received shipments of goods on trucks subsidized by highway construction, especially after the creation of the interstate system under President Eisenhower. Shipment of goods on these government-built roads and interstates brought down the cost of those goods (and thus boosted profits for those businesses) relative to what their cost would have been had each store owner had to have his own truck, and pay privately for the roads that would bring him his products.

Even today, private businesses all receive indirect if not direct subsidies from government, such that there is no truly “private” enterprise. Unlike a private club, a business that engages in commerce is receiving any number of public benefits from government policy, and thus, to suggest the owners of said property should have the unimpeded right to do as they please is morally absurd.

Bottom line: Only someone who has never personally felt the dehumanizing sting of racial oppression could have such a childlike faith in the ability of the market to solve the problem of racism, or the adequacy of simple private boycotts to force racist business owners to change their ways. And only someone who has never had their fundamental dignity and worth questioned as a result of their skin color could suggest patience as a solution to that maltreatment. As in, the kind of patience required for markets to correct, even in theory, any number of social maladies.

With the exception of Thomas Sowell and Walter Williams, this is why you’ll find nary a black libertarian of any note on the scene today. Most all folks of color know that the indignity of being denied service, denied the ability to try on clothes in a white owned store, or denied a job because of the color of your skin, is simply too high a price to pay so as to uphold the property rights of moral ingrates. To claim that persons who have had their dignity assaulted in this way should content themselves with shopping elsewhere is to minimize the injury to the point of obscenity; it is to make a moral issue no more important than the impetus for comparison shopping, as if one should respond to racist mistreatment the same way one would respond to a store charging ten percent more than you wanted to pay for a blouse.

But not being allowed to use a restroom and then pissing on yourself as a result, or being served food only out of the back door, is considerably different than arriving at the Macy’s, only to realize that they are charging $30 more for a pair of jeans than JC Penny’s. In the latter case, it is no great burden to turn around, leave the Macy’s and give your business to the bargain store. In the case of the former, the psychological and even physical effects of the unjust treatment run deep. And the fact that there are persons like Rand Paul and John Stossel who refuse to see the difference–or if they do, refuse to think it worthy of correction by the collective will of the people, embodied by the state–should serve as a not-so-subtle reminder about the banality of evil and just how cavalier white people can often be about the harms meted out over the years to our brothers and sisters of color.

And here’s the really important visual to consider: to suggest that those property owners were right to say they “shouldn’t have to serve” blacks, and that their property rights were more important than the right of all people to be treated like human beings, is to side with the white thugs who surrounded those brave young men and women–black and white–who had sat down on lunch counter stools and refused to move. It is to side with the mob as they screamed hateful epithets in the direction of Diane Nash (whose name I’d bet Rand Paul has never even heard, let alone her story), and John Lewis, and Bernard Lafayette, and Paul La Prad, in Nashville, among others. It is to say that those racist goons were on the right side, philosophically at least. That they were the ones with a better understanding of what America was supposed to be about, rather than those dignified and courageous souls whom they attacked. That they were the patriots who truly loved their country and had a deep appreciation for the Constitution. It is to side with the cops as they dragged peaceful demonstrators from lunch counters, because after all, the latter were trespassing on “private property.”

Think about that. And then think about how perverse it is that exactly fifty years after those sit-ins took place–sit-ins that must rank among the greatest endeavors for freedom in the history of this or any other nation–we still have among us people like Rand Paul and John Stossel who don’t get it.