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November 08, 2005

Comments

Peter

Great post. I have no love for the current French government, but I was very shocked to hear a friend who has lived in France talk yesterday as if the non-religious conditions that supposedly led to riots are the fault of the Right. In so far as unemployment is a cause of these riots, the reponsibility lies with the left-wingers who take to the streets the moment any reforms that would increase employment are proposed, and those phony right-wingers like Chirac who capitulate to them - not genuine free-marketeers.

EU Serf

This is a message that cannot be shouted often enough. Markets cannot be racist or discriminatory in any other way. Discrimination leads to loss of efficiency and therefore loss of competitive edge.

stu

"Markets cannot be racist or discriminatory in any other way"

This may be true but i think you are idealising markets. This view does not take into account the interactions of human beings with markets. Markets may be colourblind but this relies on those operating within the market being rational utility-maximisers. There is more complexity to society than this.

It is a nice idea to believe that markets can be scientifically analysed and predicted but (unfortunately?) markets must operate within a political and social, as well as economic, framework and this means that such statements as above are too simplistic for the real world.

Backword Dave

A nice idea spoiled by ridiculous examples. If you're going to cite "Condi Rice or Colin Powell" then you could explain how getting ahead in government (and in Powell's case, the army) is different from "non-market institutions - like the police". How is the the US Army in any way like a market competitor?

"Racist chanting is common at Italian or Spanish football grounds, but almost unheard in England." Yes, now after a campaign to convince the fans it was uncool. Although I grant you, once almost every team had at least one black player, it began to look rather foolish, even to entrenched racists.

You know more about the City than I ever will, but haven't there been several cases of sex discrimination in that competitive market environment? If markets squeeze out "ism" discrimination and prejudice, why haven't many banks collapsed because they preferentially employ (and promote) white men?

JohnM

It is a nice idea to believe that markets can be scientifically analysed and predicted but ... such statements ... are too simplistic for the real world

I'm glad someone has finally understood Adam Smith.

Robert Jubb

Even perfect markets are colour-blind only on the assumption that the consumers in them don't have external preferences. It might, for example, be perfectly rational for me as a hotelier to refuse to let some racial group stay in my hotel if the effect of doing so would be for everyone else not of that racial group to leave the hotel.

dearieme

But what if some mob proves unable or unwilling to enter the market?

chris

Rob - in markets, people must pay a price for indulging their racist tastes. In your example, racist guests must move to a (presumbably second favourite) hotel if they don't want to share with blacks. Or the hotelier loses custom if he turns blacks away.
By contrast, the state allows cost-free racism. Policmen can harrass blacks, or voters can vote to reduce the liberties of immigrants without having to pay a price.
Which institution is most likely to reduce racism?

Mark Tm

The French labour market is a classic insider/outsider problem. For example, as a plumber, if you want to employ a junior plumber on 10 euros and hour, you have to pay another 10 euros in national insurance to the Govt. The junior plumber is happy becasue he probably pays little more in tax, but the real loser is the guy who never gets a job since the demand for plumbers reflects the 20 euro rate.

The point on City 'isms is largely misplaced. It is vastly more meritocratic (go down to Canary Wharf and see how many black and asian male and females work there)and the big banks are painfully aware of "diversity". However, there are other forces at work. The rewards for suing for discrimination are disporportionately high and make a lot of headlines. As Willie Sutton used to say, "it's where the money is"

chris

Thanks for saying that, Mark. Here's a hypothesis: there's more ethnic diversity on many dealing floors than in the Guardian newsroom.
I suspect that one reason for discrimination cases in the City is that pay differentials are large and often arbitrary. Any woman on the unlucky end can therefore claim discrimination, and her employers won't want to draw attention to the huge pay discrepancies than exist even between men.

rjw

Have to say I'm very sceptical of all those who have commented that there is no scope for discrimination in a free market. Particularly when it comes to the labour market. Of all possible markets, the labour market is perhaps least like the free market of a textbook than almost any other, for a whole catalogue of reasons (obvious ones - turnover and training costs, internal career ladders, incomplete contracts, interdependence of wages and productivity).

As a result there are all sorts of uncompensated differentials in labour markets - segmentation is pretty rife in other words. Labour markets are not fluid spot markets where we check for the best deal every day. And so there are plenty of situations where the market is not a terribly effective way of disciplining behaviour. Or do we really beleive that sexual harassement, bullying and rascism in the workplace are myths?

After all - bullying can't exist in the workplace because people bullied would always walk out the door - right? Wrong. If you are in a "good" job in a top flight organisation you may put up with a lot of shit to hang onto that hard-to-get slot, aware that in a year or two the bully/harasser/rascist will have moved on to someone else.

Organsations have internal cultures - whether they are market based or not. Firms are organisations, with people that work in them. What's worse - sometimes the whole market, not just individual firms, can share a culture. If you have a culture of authoritarian and bullying management across a sector or industry, what good does walking out the door to another firm do you? None.

So a bit less of the bowing down to the holy gods of the free market would be in order, I suggest.

Having said all that - I think Chris is right in suggesting that non-market organisations are often worse as they may have even fewer mechanisms that impose discipline. But I'm not buying the line that the market roots out all these nasty abuses. Personal experience suggests otherwise.

Scribe

Reminds me of a BBC Radio 4 programme. I agree with what some other posters (e.g. stu) have said - money itself has no bias, just as technology or atoms don't. But I don't believe that profit-seeking and cultural bias are inherently mutually exclusive. I would say that markets and technology (moreso the latter) have meant that transactions have become more "anonymous", so that the possibilities for bias are removed (e.g. on-line commerce, finance by proxy, etc), but that would merely hide any racism that continues to exists in non-market society, without actually addressing the issue. Do markets, as another example, lead to a redressing of the imbalance in sexism?

If you were to argue that racism is less apparent because we're more isolated, and because we're forced less to interact with people that we don't want to... that's an interesting avenue.

Scribe

Oop. Link to that Radio 4 Programme:

http://news.bbc.co.uk/nol/shared/spl/hi/programmes/analysis/transcripts/02_11_28.txt

Curious

Nice one Chris.
And now to add my twopence.....

The power of stereotypes that support prejudice comes, in part, from a more neutral dynamic in the brain that makes all types of stereotypes self-confirming.

People remember more readily instances that support a stereotype, while subconsciously tend to discount the numerous instances that challenge it. For instance, on meeting in a bar, an emotionally warm and open Englishman, who unconfirms the stereotype of the cold, reserved Briton, people may resign themselves to think that he's just unusual or that he's been drinking.

What's my point?

The tenacity of subtle biases may explain why, over the many decades, racial attitudes have become increasingly more visibly tolerant, whilst more subtle forms of bias persist. When asked, such people say they feel no bigotry, but in an ambiguous situation, still act in a biased way, though they give a rationale other than prejudice. Such a situation is now visible in France, though it persists in many other countries, like ours, the USA, etc, simmering just under the surface.

Why is it explosive, because the unfortunate recipients of subtle racial bias that is endemic of the "highly tolerant" society today have a difficult task proving it. The result is the subtle prejudice spreads like a virus and becomes embedded in society like it is today (institutions). When a situation like France's arises, it is merely a trigger to the stockpiles of many years of hurt and subtle maltreatment.

Before we examine the spec in our neighbour's backyard, let us examine the log in ours.

http://culturefusion.blogspot.com/2005/10/representative-heuristic.html

http://culturefusion.blogspot.com/2005/10/economist-magazine-blunders.html

Jake

There are many examples of good intergration in non-market based organisations. The NHS seems quite a good example with employees from all over the world.

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