by Brian Balfour
Senior Vice President of Research, John Locke Foundation
Government intervention to correct for supposed past or existing “systemic racism” is the preferred action of self-styled “antiracists.” But what if I told you government intervention can enable racism and discrimination?
In many cases in which the government meddles in what should be free, voluntary interactions between people, the penalty for discrimination is lowered, which invites more of it.
Take, for instance, minimum wage laws. When the government mandates a minimum wage that is above what the market would set for low-skilled jobs, employers will demand less low-skilled labor while more people will be willing to offer their labor.
The result is more willing workers for fewer available low-wage jobs. Such a situation enables employers to be more selective than they otherwise could be. Indeed, the employer may be so empowered that he could begin to use criteria unrelated to job skills as part of his selection process — criteria like race, sex, or national origin in which he may have biases for or against. Hiring decisions may not just be based on the best qualified applicant. Because of the excess supply of willing workers at the heightened government minimum wage, however, the employer will face little to no consequences for acting on his bigotry.
Conversely, in a free, unfettered labor market, such acts of discrimination would come with a potentially steep cost.
In his book “Basic Economics,” Thomas Sowell explained why “members of unpopular racial or ethnic minority groups” are disproportionately affected by minimum wage laws. While it is widely acknowledged that the original intent of minimum wage laws was to price minorities out of the labor market, today’s advocates could benefit from Sowell’s analysis.
“(S)urplus labor resulting from minimum wage laws makes it cheaper to discriminate against minority workers than it would be in a free market, where there is no chronic excess supply of labor,” Sowell began.
This discrimination is due to the fact, that, “in a market where wages are set artificially above the level that would exist through supply and demand, the resulting surplus of job applicants can mean that discrimination costs the employer nothing, since there would be no delay in filling the job under these conditions.”
Conversely, Sowell continued, “An employer who refuses to hire qualified individuals from the ‘wrong’ groups risks leaving his jobs unfilled longer in a free market. This means that he must either leave some work undone and some orders from customers unfilled — or else pay overtime to existing employees to get the job done. Either way, this costs the employer more money.”
In short, government intervention in the labor market, described by today’s supporters as being helpful to low-skilled workers, particularly minorities, ends up lowering the cost of discrimination. Unsurprisingly, Sowell concludes that, “Empirical evidence strongly indicates that racial discrimination tends to be greater when the costs are lower and lower when the costs are greater.”
A similar thing can be said about rent control. If the government caps rental rates at a level below what the market would settle, a surplus of applicants will be created for those rental units. In other words, there will be more people willing to rent such dwelling units than there will be units available at the artificially capped price.
Landlords can then more freely deny applicants from groups based on their identities with little fear of financial penalty because there will be plenty of other willing tenants to choose from. In a competitive housing market, however, supply and demand of housing will be more closely matched, and landlords will risk leaving a unit unfilled for longer if they discriminate on noneconomic factors.
One may mention here that antidiscrimination laws exist to protect against such actions by employers and landlords, but enforcement of such laws is exceedingly difficult as it is often impossible to read the minds of said offenders to prove intent.
The more entrenched the government is in an activity, the easier it is to implement racist discrimination against unfavored groups.
Furthermore, the more entrenched the government is in an activity, the easier it is to implement racist discrimination against unfavored groups. Recall that the Veteran’s Administration adopted explicit racial preferences for administering Covid vaccines, while the CDC also flirted with the idea. Imagine if we fully transitioned to a single-payer system in which the government is the exclusive provider of medical care. The ruling regime would have unfettered ability to discriminate.
And as Sowell pointed out, the cost to government for discrimination is essentially nil – any such costs are passed along to taxpayers. As a result, Sowell noted that historically, “In countries around the world, discrimination by government has been greater than discrimination by businesses operating in private, competitive markets.”
Finally, there’s the very real prospect that government control of markets and institutions allows them to discriminate based on political affiliation, and don’t think governments would hesitate to discriminate against what officials perceive to be political enemies. Recall the Canadian government’s eagerness to freeze the bank accounts of the truckers involved in the anti–vaccine mandate protests last year.
Greater government involvement in the lives of citizens is a very poor means to combat racism. In fact, many such measures end up enabling racists by lowering the cost paid for discrimination.