In a move that is sure to spark controversy, the Arkansas State Senate just introduced new legislation to outlaw transgender bathrooms in all publicly-owned and privately-owned buildings.*
When it comes to the question of antidiscrimination, free market economists and libertarians tend to suggest a laissez-faire solution that strikes many people as naive. The story goes something like this for consumers:
Suppose a hypothetical business’s customers are 80% white and 20% black. This business is located in a place where many white people are racist. Further suppose that these racist customers are opposed to the idea of eating in an integrated restaurant. Thus, the self-interested business owner makes a calculation that enough of his customers (and the local population) are racist that he might be able to win more business by excluding black people from his restaurants–because he’ll gain more favor with those racist customers. And whatever small minority might be offended by it (i.e. the more egalitarian-minded white people) and the minorities themselves, will be too small to offset his gains. If his math is right, and it may well be if racism is popular enough, this might make business sense. (Of course, if by contrast, the amount of the population that is virulently racist is relatively small, then discriminating on race would be counterproductive, even in amoral economic terms.)
It doesn’t really matter whether the owner himself is racist or not. The decision will, or will not be economically sustainable based on the opinions of the public in general, regardless of the owner’s own views.
So based on the above story, we must concede that it is possible that discrimination could, under certain conditions, make business sense. I’m not sufficiently familiar with how quickly opinions evolved in the South, so I won’t claim to know how long this remained economically feasible. For these purposes, it is enough to acknowledge that is a possibility. So the question becomes, what happens to the minorities? Will there be any businesses to serve their needs?
And the answer is obviously yes. Indeed, the discrimination of the businesses, means that minorities would be an untapped market that would be easy for the entrepreneur to gain as customers. They might devise a business that caters exclusively to the needs of those minorities, or, more likely, they might make an integrated establishment that could attract a wider range of customers. Assuming the latter, over time this second business would also be sustainable. If we further assume the general trend that younger generations tend to be more tolerant (at least of race, gender, etc.) than their parents continues, then this second business would become more profitable in the long run, and the discriminatory business would eventually have to change its ways as its customer base shrinks. Even if we assume no change in tolerance over time, it’s still the case that the business serving minorities should be able to do so properly. Discrimination might exist in this case, but no one is being denied access / underserved.
These [private bus company] owners may have been racists themselves but they were in business to make a profit — and you don’t make a profit by alienating a lot of your customers…
People who decry the fact that businesses are in business “just to make money” seldom understand the implications of what they are saying. You make money by doing what other people want, not what you want.
Black people’s money was just as good as white people’s money, even though that was not the case when it came to votes.
Here’s a link to the rest of the piece, which I highly recommend:
This week, two Oregon bakers (the Kleins) finally paid damages to a lesbian couple (the Bowman-Cryers) after discriminating against them. For the uninitiated, this story actually dates back to 2013 and the facts of the case are pretty straightforward. Basically, the Kleins refused to bake a wedding cake for the Bowman-Cryers, and they specifically cited their Christian beliefs as the reason for denying service. That is, the Klein’s version of Christianity thinks same-sex relationships are morally wrong, and thus they did not want to bake a cake for a same-sex wedding. In response, the Bowman-Cryers filed a nondiscrimination complaint against the business, and ultimately the court sided with the couple and ordered the Kleins to pay $135,000 in damages in 2015. The situation quickly escalated after the initial complaint was filed, but it is important to note that the court’s decision to award damages was based solely on the initial act of denying service. Upon receiving the judgment, the bakers refused to pay the damages, but now this week they paid the balance off in full. This latest development is why this story is back in the news.
Although the payment development is not terribly interesting by itself, the broader issue of nondiscrimination legislation is an important one. In this case, it’s pretty easy to predict that the commentary will break down along ideological lines. Conservatives will cite this case as further proof of the government’s war on Christianity and an attack on religious freedom. Liberals will likely cite it as a victory for gay and lesbian rights. If you agree that discriminating against people based on their sexual orientation is absurd, it may be tempting to join with liberals in celebration on this one. But we must remember that it is always tempting to applaud government coercion when it is used against your opponents. The important question here isn’t whether we prefer the views of gay people or the views of religious conservatives. The real question is whether we want government coercion being used to force any private citizen to provide a service against their will.
That’s the focus of our piece today: Should we support anti-discrimination laws like the one in this case?
To answer this question, it is useful to consider the logical possibilities of these nondiscrimination laws. Specifically, we’re going to concern ourselves only with laws that prevent discrimination by businesses that provide public accommodation (like hotels, restaurants, grocery stores, etc.), and we’ll stick with the bakery example for our thought experiments. Also, note that the analysis and opinions expressed here wouldn’t apply to the Kim Davis marriage license situation in Kentucky because she was acting as an agent of the government, which can’t have religious beliefs, rather than as a private citizen.
So under Oregon law, discrimination is deemed unlawful if it occurs on any of the following protected characteristics, which are known as protected classes. The items in bold are the only ones that are recognized under Federal law:
- Race / color
- National origin
- Sex (includes gender, pregnancy and sexual harassment)
- Sexual orientation
- Retaliation for opposing an unlawful employment practice
- Association with a member of a protected class
- Marital status
- Physical/Mental disability
- Injured workers
- Family relationship
- Men accuse female-focused networking group of gender discrimination, and win.
- Bakery sued for refusing to write (religiously inspired) anti-gay phrases on cake.
- Bakery sued for not catering to the KKK leader’s birthday party.