On anti-discrimination laws

Nigel Farage wants to scrap a lot of discrimination laws. From one perspective, this isn't wholly outrageous.

In principle, there's a stronger barrier to discrimination than mere law - competition. As Kristian Niemietz says, channeling Gary Becker:

A competitive market economy provides us with strong incentives to keep our personal prejudices out of our business decisions. Even the most sexist/homophobic/racist employer can realise that by hiring only heterosexual men of Saxon descent, they limit the talent pool accessible to them, which is not smart business. Especially when talented applicants can go on and work for a competitor.

There's some truth in this. Competition explains why Ron Atkinson - a man later revealed to have racist attitudes - hired black players in the 1970s. And it explains why "politically incorrect" financial firms have more ethnic diversity than the "liberal" arts establishment.

I would rather racists who hire inferior Brits over talented foreigners go bankrupt and lose their life savings than merely get a slap on the wrist from law courts which feeds their martyr complex.

But. But. But. There's a question here which applies to many theories in the social sciences. Whilst Becker's theory that competition reduces discrimination is partly (pdf) true, just how true is it?

The wheels of competition just don't grind finely enough to entirely root out discrimination; the fact that there are ethnic (pdf) pay gaps (even controlling for qualifications) tells us this. And, I fear, this would remain the case even if measures were taken to increase competition; a perfectly competitive economy is a textbook ideal, and not something seen in the real world.

My doubts here are reinforced by an agency problem. Tesco's bosses (say) - and certainly their long-suffering shareholders - might well genuinely want to maximize profits and so hire the best people. But do the petty tyrants who run their stores really wholly share that aim? And wouldn't a few of them have sufficient wiggle room to indulge their own prejudices against the interests of their distant employers? There is a great deal of ruin in any large organization, and within that ruin there's room for discrimination to survive.

And to the extent that big local employers sometimes enjoy at least a modicum of monopsony power, I'm not sure it's good enough to claim that the victims of discrimination by the minority of racists would find equally rewarding work elsewhere.

Now, I am expressing all this in the form of doubts and scepticism for a reason. The question here is: on which side do we wish to err?

Let's say my doubts are ill-founded and discrimination laws are superfluous. Then nobody gains or loses from their removal - because firms would carry on hiring the best people anyway.

But what if my doubts have even a little validity? Then the winners from removing such laws are racists. And the losers are meritorious ethnic minorities. Do we really want to take the risk of helping the former and hurting the latter? And what does it say about Mr Farage that he is willing to do so?  

Comments

[pablopatito]

"There is a great deal of ruin in any large organization, and within that ruin there's room for discrimination to survive."

Not sure about this argument. Tesco will have a large HR department that would likely apply anti-discrimination rules even if the law didn't require it. Whereas small businesses are less likely to be even aware of a lot of legislation, never mind adhere to it.

[Luis Enrique]

this is spot on, a tune for my middle of the road preference for a mixed economy, a diversity of policy approaches

and in tune with that Manski stuff I keep flogging about policy under uncertainty, your conclusion is I think almost text book min-max regret:

http://en.wikipedia.org/wiki/Regret_%28decision_theory%29

[Min]

There is also a cultural matrix for discrimination, and that can alter the payoffs. For instance, within living memory in a number of places, to hire a Negro as a janitor might be socially acceptable, even preferable to hiring a White, hiring a Negro as a salesman would not only be likely to drive customers away, it would reduce the business owner's prestige and lose friends. And ever hiring a Negro as a bookkeeper, out of the eyes of customers, might not cost sales at first, it could easily have social repercussions.

More recently consider the glass ceiling. To promote someone above the glass ceiling is to admit them into a kind of social club. Other club members may well object if the person promoted is not sufficiently like them, in any number of ways. Promoting that person then would have negative social repercussions.

Incentive matter. And culture affects incentives.

[Donald]

Another reason for laws is that competition can promote discrimination too, eg if it reduces selection costs/risks or improves selection outcomes.

You might go for a Polish plumber because you expect him/her to work harder. You might prefer a native private hire driver as they tend to rely less on the satnav.

[An Alien Visitor]

"I would rather racists who hire inferior Brits over talented foreigners"

i think we are already encountering a problem with your thought process even before we get onto them going to the wall. The idea that a slightly less able employee will sink the company and that their inferiority won't be addressed by on the job training etc. If peoples abilities are set in stone and have a material affect on the outcomes then you may have an argument but in that case, move over to the right and stop n=being on the left.

Furthermore, employers of the past did discriminate against people of ethnic minorities for decades, it is why the legislation was brought in. But even now, ethnic minorities are discriminated against, make up a relatively large part of the prison population and the unemployed.

Your market doesn't work as effectively as you like to imagine. Come down from the clouds and get real.

[Donald]

@ an alien visitor.

I hope that's not a deliberately short quote.

[KJ]

"And what does it say about Mr Farage that he is willing to do so?"

That he's a racist bigoted twat, but then we knew that already right?

[cityunslicker]

In the real world where I work there is huge discrimination. You hire a gay person fine, but when it comes to getting rid of them for underperformance its a real headache. They may make some crazed claim about discrimination with UNLIMITED LIABILITY. Faced with the this and the potential media sahem, firms settle out of tribunal.Same for race and sex discrimination. This law is wrong, why is there a moral judgement made about this - what about ginger people, fat people etc.

Where Farage speaks to a populist agenda, the law is in itself discriminatory by design. Of course we should give people equal and fair opportunities of employment - currently they don't get it. the more specific 'rights' a group gets, and this applies to women to due to maternity laws, the worse their overall employment prospects will turn out to be. In the real world, the one where people make tough real choices, as opposed to the ivory tower world of leftitist ideology.

[Icarus Green]

*Throws the cat among the pigeons*

Does anyone seriously expect that if we somehow abolished stereotyping or even just its outward manifestation, discrimination, we would get exactly the same demographic ratio of engineers, athletes, actors, fund managers, hairdressers, nurses, and any other skilled job, in proportion to their demographic numbers in the population?

[lilnev]

"Assume that racists are rational actors...." Start with an oxymoronic premise, reach a moronic conclusion.

[What you looking at]

Whisper this cityunsslicker but i have a degree of sympathy for your comment.

But you have to be self critical sometimes.

Take maternity - there is usually a male partner involved here. Also within the average wage there is the whole cost of childcare, and people get this whether they have children or not. So in your world of what is fair those who don't have kids should get paid less than those that have them.

But let us agree that people should not be discriminated against for being a different colour or being from a different culture.

[PaulS]

"Then nobody gains or loses from their removal - because firms would carry on hiring the best people anyway."

That is more than a bit misleading. Mountains of paperwork, even 'virtual' paperwork, laboriously created and maintained to 'document' a proposition that is in the negative and therefore intrinsically unprovable - "OurCorp doesn't discriminate" - are hardly cost-free. The lawyer time involved is unbounded and absolutely not cost-free; indeed it is exceedingly lucrative for lawyers.

The knock-on effect will be multifarious. The staggering potential cost makes it impractical to fire or discipline a member of a specially-privileged "class" who is a poor worker, which is great for lazy or incompetent class members. But that creates a powerful disincentive to hire (i.e. take a chance on) class members in the first place, which is not so great for class members of any sort.

I suppose it all does provide the academic community unbounded opportunity to publish papers. After all, on current theories, the universe can not last long enough to finish sorting out where the chips ultimately might fall.

[Dipper]

Nigel Farage was asked about his ideal society. His ideal society has no racism and hence no need for racial discrimination laws. They would make as much sense as left-handed discrimination laws.

Others who criticise him seem to be saying that their ideal societies have race discrimination laws, presumably because their ideal society is a racist society?

[Dain]

Your link in "more ethnic diversity than the liberal arts…" isn't working. I'd love to check that out!