Racism Is a Poor Explanatory Variable

by Don Boudreaux on November 26, 2022

in Competition, Myths and Fallacies, Seen and Unseen, Work

Here’s a letter to a regular Café patron, but one who often respectfully disagrees:

R__:

Thanks for your e-mail.

In response to my recent post that is critical of the ‘New History of Capitalism’ – a ‘history’ whose practitioners argue that capitalism is rooted in slavery – you write:

Although New Historians probably exaggerate the links of capitalism with slavery, they are useful for reminding people racism is the root cause of American inequality and other problems.

I disagree. I don’t doubt that, in our nation of 332 million souls, several of our fellow citizens continue to be bigoted, narrow-minded, and racist. Alas, the imperfections of humanity ensure that it will always be so. But I also don’t doubt that, because charges of racism today are so easy to level – and because they grab so much uncritical attention – these charges create the impression that racism is more widespread than it really is, and that it is responsible for many more problems than can, in truth, be credibly attributed to it. Social and economic processes are far more complex than most people realize, with the ‘outcomes’ of these processes being determined far less by people’s attitudes and intentions and far more by the opportunities and constraints that each of us daily confronts.

Consider a pertinent example. In competitive markets without a minimum wage, the racist supermarket manager wishes to employ only whites to work in his store, but he’ll be driven by competition to hire the best workers available regardless of their race. The ability of minorities to accept work at wages lower than are demanded by whites makes it unacceptably costly for this manager not to employ qualified minorities. Further, competition for workers among supermarkets and other employers eventually compels this manager to pay workers according to their productivity and not according to their race or other irrelevant characteristics. Competition and the flexibility of wages, in short, cause the ignorant racist manager to behave as an enlightened liberal.

Now introduce a minimum wage and let the supermarket manager be without a racist atom in her body. As in the previous example, grocery retailing is highly competitive. In this instance, however, the minimum wage ensures that the number of applicants for jobs at the supermarket exceeds the number of jobs available. This nonracist manager then must choose which applicants, from a relatively large pool, to hire at the minimum wage. The black applicant was schooled in poor-quality government schools while the white applicant went to an excellent private school. The black applicant must rely upon public transportation while the white applicant has his own car. The black applicant lives with her single mother and might often have to stay home to care for her younger siblings, while the white applicant has no such family constraints.

Which of the two applicants will the manager hire? The white applicant – not because the manager is racist but because the minimum wage prevents the black applicant from offering to work at a lower wage in order to compensate the employer for this applicant’s handicaps. The minimum wage, in short, causes the enlightened nonracist manager to behave as would a racist.

The above doesn’t deny the reality of racism. Instead, it’s a plea to replace childish explanations based on attitudes such as racism, with adult explanations based upon scientific analyses of the complex realities of constraints and opportunities. Leveling charges of racism is easy and fills accusers with a gratifying sense of self-righteousness. Further and deeper thought about the matter is thus discouraged. But such charges, because they’re knee-jerk, are nearly always shallow. Worse, they divert our attention from the true, if less emotionally rousing, sources of problems.

Sincerely,
Don

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