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In politics, the dominating part of the population rules. Some believe the anti-semitic practices of the Nazi-Germany would not have happened in free markets, because they would have caused losses.[88] However, government officials and politicians need not care about losses as much as companies, which decreases their incentive not to discriminate. In the U.S. for example, around 1900 African-Americans started to compete for jobs that had previously been all-white. Officials, voted in by white majorities, changed the hiring rules for the federal civil service. Photographs of applicants were made obligatory in civil service job applications, and hiring officials were given discretion to choose between the three top scoring applicants. The number of blacks in federal employment was kept artificially low for decades.[89] In early 20th century South Africa mine owners preferred hiring black workers because they were cheaper. Then the whites successfully persuaded the government to enact laws that highly restricted the black's rights to work (see Apartheid).[89] Similarly, to make more profits, producers secretly hired screenwriters who were on Senator Joseph McCarthy's blacklist, which mitigated the effects of the list.[89] When the "Jim Crow" racial segregation laws were enacted in the U.S., many companies disobeyed them for years, because the market automatically punishes companies that discriminate: they lose customers and get additional expenses. It took 15 years for the government to break down the resistance of the companies.[90] Markets punish the discriminator In his book The Economics of Discrimination (University of Chicago Press, 1957) the Nobel Prize–winning economist Gary Becker asserts that markets automatically punish the companies that discriminate.[88] According to Becker, the profitability of the company that discriminates is decreased, and the loss is "directly proportional to how much the employer's decision was based on prejudice, rather than on merit." Indeed, choosing a worker with lower performance (in comparison to salary) causes losses proportional to the difference in performance. Similarly, the customers who discriminate against certain kinds of workers in favor of less effective ones have to pay more for their services, on average.[88] If a company discriminates, it typically loses profitability and market share to the companies that do not discriminate, unless the state limits free competition protecting the discriminators.[89] In The Welfare Implications of Becker’s Discrimination Coefficient Richard S. Toikka disagrees, citing the ambivalent relations between discrimination and economic efficiency, as shown by the literature. According to Toikka the “discriminatory tastes,” in Becker’s explanation, was shown to be problematic because it implies discrimination is efficient.[91] Further, the very aim of the markets is to cater efficiently for the different "tastes" of all individuals, including customers, employees, employers, and firm owners (and discrimination happens within and between all these groups). If discrimination were just another "taste" then the markets were not to punish for it. Second, microeconomic theory turns to unusual method - explicit treatment of production functions - when it analyzes discrimination. And third, the very existence of discrimination in employment (defined as wages which differ from marginal product of the discriminated employees) at the long run, contradicts perfect competition and efficiency (which imply equality of wages and the said marginal product). Hence, the very existence of discrimination at the long run, contradicts the claim that the markets function well and punish the discriminators.[92] |
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