The women’s rights movement did a bit of recent headline grabbing when Virginia’s new-blue government ratified the Equal Rights Amendment. That the deadline for ratification passed decades ago (probably) makes this a symbolic gesture, although I’m sure many lawyers will be busy arguing about it for the next few years, and the various political forums will suddenly find themselves replete with Constitutional scholars.
Coincidentally, or perhaps not, a video of the Great Man, Milton Friedman, speaking against legislated equality crossed my feed. He makes perfect sense, as he always does. And, given that we are in Hollywood awards season, when millionaire actresses stand on stage, bedecked in tens of thousands of dollars in fashion and hundreds of thousands of dollars in jewels, are wont to scold us about the wage gap and implicitly or explicitly demand government intervention as remedy, Friedman’s observations are as timely today as they were back then.
Among much that’s eminently quotable, there’s this:
You want to make it costly to them to exercise their prejudice.
He is referring to employers who discriminate when hiring.
In a free market, without government mandates or restrictions, employers are subject to pressures that undermine their ability to discriminate. Against women, against minorities, against whomever. If someone will only hire white workers, he is artificially shrinking the pool of labor from which he can choose, and this will result in him paying higher wages than other employers who aren’t discriminatory in hiring. That’ll force him to raise his prices, and that’ll hurt his profits and market share. His bigotry will cost him money out-of-pocket. Ditto for someone who either won’t hire women or won’t pay them market wages.
Consider, though, what happens when the government sets a minimum wage, or when it declares it illegal to pay women less than men for “equal work.” The bigot is now free to discriminate, because he’s protected in that discrimination by the government. Non-discriminating employers won’t be able to hire from the broader labor force at lower wages, because the government says “you must pay at least X.” Now, the bigot is rescued from the costs of his bigotry, and is free to hire only white men, without consequence.
The big government response to that is, of course, to write more laws and regulations, create bureaucracies and further empower lawyers. This’ll nab some of the less-clever bigots, but the smart ones will still figure out how to do as they would. The natural, passive, no-need-for-oversight market forces that would punish bigots would remain out of play, and there’d be no financial penalty for discrimination, as long as one doesn’t get caught. Market forces outweigh such cleverness. Active management is only as good as the managers, and only as comprehensive as their vision is expansive, but you neither hide from nor outfox the tide. Market forces are relentless and eternal.
The original minimum wage laws were actually written by bigots to protect bigots from market forces, and minimum wage laws today harm, rather than help, the poor, minorities, women, and other traditionally discriminated-against groups. Superficially, one might object to these groups being paid less than their white male counterparts for doing the same job, but in forcing employers to pay an above-market rate, it precludes members of those groups from undercutting their counterparts, taking those jobs, benefiting the non-bigot employers, and punishing the bigoted ones. Remember – markets, economies, and jobs are not static. If the bigots are pressured by market forces, either to hire those they’d not otherwise hire, or to lose market share/go out of business, society moves in a direction of less bigotry. Without government’s heavy and destructive hand, and without the inefficiencies introduced by adding bureaucracies and lining the pockets of tort lawyers.
Unfortunately, many are afraid to let the market sort things out, even though both logic and evidence demonstrate that it will. And, a few whose real goal is the wielding of power will spin tales and play games with the evidence, blaming market forces for the results of government distortions, and cherry-picking examples to “disprove by anecdote.” There is no utopia, and it’s inevitable that someone in some circumstance will be a bigoted hirer. This doesn’t disprove the premise that market forces are the better approach, though, just as one example of a person getting a disease despite being vaccinated doesn’t disprove the benefit of vaccination.
When we learn to trust markets, not managers, we’ll see many of the workplace problems that persist despite the efforts of managers “magically” wane, and our society will be that much closer to the ideal of the individual, where we are each judged for who we are and not what we look like.
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