discrimination and hate, equality, racism, work

Racism (4): Competition v Racial Bias

I’ve written a lot about discrimination, inequality and poverty, but I have to admit that much of it was descriptive, moralizing and philosophical. Especially regarding racial bias, I haven’t come up with many solutions, apart from better education and affirmative action.

gary becker

Gary Becker

(source)

I’ve now discovered the work of Gary Becker, a Nobel Prize winning economist who wrote about this some decades ago (I know, I’m late). He looked at the well-documented fact that African-Americans in the U.S. earn less than whites, partly because on average they are less well educated. But even if corrected for this, there remains an unexplainable difference in wages. Unexplainable apart from racial bias. There have been many studies that have proven the existence of bias. For example, firms are 1.5 times as likely to interview someone for a job if they think the person is white, even if all other characteristics such as education and experience are equal.

wage differences by race

(source)

The interesting thing about Becker is that he goes beyond education, positive discrimination or labor legislation in his search for solutions. He mentions increased competition between firms. A racially biased firm will only hire a white who is more expensive and perhaps even less qualified than a black, if this firm is not under pressure from competitors. If its market is opened to competition, then other firms can and will produce the same goods at cheaper prices by hiring the black guy/gal. The biased firm would then be forced to do the same. It may remain biased – opinions on such matters are notoriously hard to change – but it no longer has the luxury of acting on its bias.

So this sounds promising, and market freedom is beneficial for other reasons as well, so it’s worth to pursue it. But don’t expect too much of the free market. There’s no invisible hand, leading those motivated by selfish motives to destroy racism without really wanting to. Much more needs to be done.

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6 thoughts on “Racism (4): Competition v Racial Bias

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