Theoclassical economists have strange views on a wide range of subjects including discrimination. Becker was an economist at U. Chicago. Richard Epstein, Becker’s colleague at U. Chicago’s law school, cites Becker’s book about discrimination as his key citation to the economics literature expressing doubt about the desirability of laws against discrimination. Epstein’s book calls for the repeal of all laws and rules limiting discrimination. Forbidden Grounds: The Case Against Employment Discrimination Laws (1992: 2 n. 2). Epstein’s poisonous fruit of Becker’s twisted vines was published in the year the Swedish Central Bank awarded its Prize in economics to Becker. The Swedish Central Bank Prize cited Becker’s work on discrimination as one of the keys leading to his selection for the award.
Theoclassical Economics’ Inability to Comprehend Discrimination
What does economics have to say about employment discrimination? Neoclassical economics’ inability to comprehend one of the most common and disabling social ills – discrimination – is a classic example of its limitations. Neoclassical economists suffer from a self-inflicted limitation that cripples their ability to discuss discrimination honestly. Under the standard assumption of rationality essential to all their models discrimination cannot exist because it is irrational. Neoclassical economists could respond to the failure of their models by changing their models, but that would cause them to have to admit massive errors and raise the question – why are we listening to these folks?
Theoclassical economists, by definition, are prisoners of their dogmas and cannot admit that those dogmas are false and harmful. Theoclassical economists have taken two primary approaches to attempt to escape this trap of their own (irrational) design that insists on ignoring so much human behavior. Both approaches are cheats that actually end up endorsing discrimination as causing little harm while producing many efficiency benefits. Epstein’s ode to discrimination is simply the “logical” reductio ad absurdum of Becker’s cheats.
The First Cheat: A “Taste” for Bigotry
Becker’s first cheat is to rebrand bigotry, which has so often proven murderous as a “taste.” This does not merely sanitize one of the worst and most destructive of human failings, it gives it a positive connotation. When we say that someone has “taste” it is a compliment. It also (seems) to solve the rationality problem because neoclassical economists are used to (assuming, incorrectly) that tastes are innate (“exogenous”) and stable rather than often being driven by advertising and other social forces. Some people have a taste for vanilla and some have a taste for chocolate. Neoclassical economists assume that all such tastes are equally valid. We don’t see many mass murders in ice cream stores between holders of these diverse tastes. I’m not aware that vanilla ice cream lovers have ever asserted the right to enslave the chocolate lovers.
Gary Becker asserts (contrary to all human experience) that employers who have a “taste” for discrimination can produce segregation at some firms, but only if the bigots are willing to pay a price – a price that will inevitably cause them to be swept away by their unbigoted competitors if markets are sufficiently competitive. (Becker denies the inevitability if the bigotry is nearly universal and intensely held by an overwhelming majority against a tiny minority.) The real victim of discrimination becomes the bigot (and the bigot’s shareholders) rather than the bigots’ targets. Becker implicitly assumes that the bigots will go quietly out of business rather than creating extra-legal means of harming firms run by non-bigots. His implicit assumption is often false, but because he makes it implicitly he never needs to defend it and probably does not even recognize he has made the assumption.
If he understood history, sociology, or anthropology he would not make the error, but as the general leading the schwerpunkt of the “Imperial Science’s” assault on other disciplines who have actual expertise in the subject matter, e.g., discrimination. The nature of imperialism, however, is arrogance and bigotry that lauds the imperialists and devalues their targets. Theoclassical economists emphasize that other disciplines’ research isn’t worth reading. The result of this mono-disciplinary arrogance is that Becker founders like many other deluded imperialists before him who never understood why their invasion of Afghanistan ended in disaster.
Theoclassical economists who chose to “rebrand” bigotry as “taste” know exactly what they are doing. It’s a cheat – the violation of the rationality assumption has simply been obscured. It is great press for bigots because it not only legitimizes their actions but holds that there is no need for laws against employment discrimination because the market will promptly cure all ills.
The Second Cheat: “Statistical Discrimination” is “Efficient”
The second theoclassical cheat about discrimination is even more pernicious and disingenuous. I provided a detailed example of this cheat in the second installment of this series of articles, which explained Becker’s disgusting innuendo that women who desired to be paid for their labor were the product of “deviant” “biology” that produced “deviant” “orientations.” Becker offered a three-fold defense of the desirability of discrimination against females. First, he argued that it wasn’t “discrimination” – it was simply “specialization.” Specialization inherently requires the separation of tasks. Becker claimed the (faux) specialization of wives working exclusively in the household and husbands working exclusively in the paid labor sector led to increased efficiency because of his asserted (fictional) “biological” “orientations” towards unpaid work on the part of women and paid work on the part of men.
Because of their overwhelming “biological” “orientation” against working for pay, women were inferior at working in the paid sector. Because women were inferior workers in the paid sector it made no sense to educate girls in skills that allow them to succeed in the paid sector. Because women were not educated to succeed in the paid sector it was sensible for employers not to hire them for such jobs. Becker explained this circular “logic,” but appeared blind to the circularity that turned a ludicrously inefficient system – not educating half of the population – into a supposedly “optimal” approach that maximized efficiency. Education, of course, is well known for providing enormous positive externalities and educating women has particularly great positive externalities. Nations increase productivity, health, and a wide range of social and political goals through providing broad education.
As I showed, the actual practices and “orientations” of American married couples bore no resemblance to Becker’s fable. American married couples adopted a vastly more efficient strategy than Becker’s fables.
Second, Becker abused the concept of “comparative advantages” (which is a failed concept in its principal field of alleged application – international development and trade) to claim that because women can lactate they have a comparative advantage in rearing infants. Therefore, they should work exclusively in the household without pay because “specializing” in being a traditional “housewife” (the quintessential generalist position) would maximize their comparative advantage.
Becker’s lactation claim was so facially bizarre and false, however, that he felt the need to launch his third and most unprincipled apology for bigotry – bigotry makes bigotry “optimal.” As I explained in the first installment of this series:
“Becker emphasized that wives should be consigned to unpaid household work even if they had no intrinsic comparative advantage for such work and the division of labor arose solely because of educational and employment discrimination by men against women and the domination of husbands over wives (1991: 63). If employers discriminated against women, Becker’s reasoning was that it was even more wasteful to educate girls for a job in the paid sector. One form of discrimination against women (job discrimination) made another form of discrimination against girls and women (education) even more ‘desirable’ on ‘efficiency’ grounds. Becker was not troubled by moral qualms against either form of discrimination.”
Calling rampant inefficiency “optimal” because it purportedly maximizes efficiency is something only a theoclassical economist could do – and only a Swedish Central Banker could reward this absurdity with a Prize. Note that Becker’s policies would lock in employment discrimination eternally by constantly reinforcing the excuse for such discrimination by locking in perpetual educational discrimination.
Theoclassical Economists Ignore the Reality of Bigotry
Bigotry is a nasty combination of hate and fear. It is a means of coercing subordination and denying its victims the full scope of human life. It uses violence and the threat of violence as well as crushing social pressure designed to make the victims doubt their own abilities. It seeks to divide and conquer its victims. It is made even more intense when it becomes a public-private partnership. All of these realities disappear in the theoclassical fables about bigotry and the resultant discrimination.