Discrimination and Property Rights

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“Discrimination” is a common cultural buzzword and the go-to label for actions or words that cause offense to particular individuals or groups. From NFL teams not signing certain players to bakers not serving certain customers, the accusation of discrimination seems to be everywhere in modern American culture.

What is Discrimination?

Any discussion of discrimination must start with its definition, so as to avoid confusion. Economist Murray Rothbard describes discrimination as “choosing favorably or unfavorably in accordance with whatever criteria a person may employ.”

Another economist, Walter Block, similarly describes discrimination as, “picking and choosing from available alternatives, the one which best serves his or her interests.”

These are fairly broad definitions of discrimination that do not get into specific reasons why individuals might choose one alternative over another. However, this broadness makes these definitions inclusive and allows us to first think about a wide range of human action before considering more narrow categories of discrimination. Therefore, I hold that this allowable breadth of definitional interpretation is indeed warranted.

Discrimination is Everywhere

Based on these inclusive definitions, it is important to understand that discrimination takes place all the time. In a world of scarcity, every decision involves discriminating between alternative choices. Block argues that choosing one alternative necessitates not choosing many others, “It is important to realize that all human actions imply discrimination… We discriminate when we choose a toothpaste, decide upon a means of transportation, whom to marry. The discrimination practiced by the gourmet or wine taster is and can only be the discrimination practiced by all human beings.”

Types of Discrimination

Despite the commonality of discrimination, it is useful to distinguish between different types of discrimination. There are two types of discrimination that I want to consider:1

  • Statistical Discrimination – This type of discrimination involves stereotyping based upon probabilities and characteristics. It assumes reliance on imperfect information that is costly to obtain and judges individuals based on their group affiliation. Examples of this type of discrimination would be profiling potential employees based on attire or judging potential suspects based on their neighborhood of residence. Statistical discrimination does not seek to discriminate based on prejudiced motives, rather, it assumes that certain characteristics are likely to signal good/bad qualities.
  • Personal Discrimination – When discussing discrimination in general, this is often the assumed type of discrimination. Generally, it is based on individual tastes and preferences, such as bigotry and prejudice. It must be noted that economically speaking personal discrimination is utility-maximizing, not profit-maximizing. So when economic agents, such as producers, employ this type of discrimination, they are seeking to maximize their personal happiness, rather than monetary profits. In order to take effect upon society, this type of discrimination requires bigotry/prejudice, the ability to act, and the willingness to act. While the first two requirements are often present, the willingness to act is often subdued by social costs (i.e. ostracization), economic costs (i.e. boycotting or loss of profits by turning away customers), and/or legal costs (i.e. suit or government force).

The Solution to Personal Discrimination

Of these two types of discrimination, personal discrimination is generally vilified more frequently than statistical discrimination. As noted earlier, three distinct forces limit personal discrimination in society: social costs, economic costs, and legal costs. However, I believe that the first two forces are much more suitable than the third force for limiting personal discrimination. How would factors such as economic forces actually work to limit personal discrimination?

Rothbard illustrates:

“Suppose, for example, that the landlord is a great admirer of six-foot Swedish-Americans, and decides to rent his apartments only to families of such a group. In the free society it would be fully in his right to do so, but he would clearly suffer a large monetary loss as a result. For this means that he would have to turn away tenant after tenant in an endless quest for very tall Swedish-Americans. While this may be considered an extreme example, the effect is exactly the same, though differing in degree, for any sort of personal discrimination in the marketplace. If, for example, the landlord dislikes redheads and determines not to rent his apartments to them, he will suffer losses, although not as severely as in the first example.”

Block uses another example:

“If, for instance, women were paid less than men even though they were equally good workers…forces would be set up which, when carried to their conclusion, would insure equal pay. How? The employer would be able to make more money by replacing male workers with female workers. The demand for male workers would decrease, thus lowering male wages, and the demand for female workers would increase, raising female wages. Every employer who substituted a woman for a man would have a competitive advantage over the one who refused to do so. The profit maximizing employers would continually earn greater profits than would the discriminatory employers. The profit maximizers would be able to undersell the discriminators, and, other things being equal, eventually drive them into bankruptcy.”

Given these strong economic forces, personal discrimination is difficult to sustain in a truly free market. Instances of personal discrimination will tend to be more common in cases of market distortion (e.g. surpluses created by minimum wage legislation), budget-maximizing institutions (e.g. the government), and/or monopoly power (e.g. the government).

Due to the potency of these economic forces to dissuade personal discrimination, I do not believe that legal ramifications related to personal discrimination are appropriate. However, my rationale for this belief goes beyond merely appealing to the efficacy of these economic forces, since coercive legal action against discriminators violates the rights of these discriminatory individuals.

The Right to Discriminate

I would argue that individuals have a right to discriminate, that is, choose how to best utilize their property and labor. The natural right to property ownership implies the right to choose how to use that property, whether it is in a personally discriminatory fashion or not. If an owner cannot choose how to utilize his/her property, how can it be said that the owner actually “owns” the property in any meaningful sense of the word? Rothbard agrees that an individual has a “right to choose who shall enter or use his property” and that this discrimination “is an integral part of freedom of choice, and hence a free society.”

Furthermore, attempts to coercively compel individuals to behave in nondiscriminatory ways violates this right to property. For, as a property owner, an individual has the exclusive right to utilize his or her own property that other’s do not share. Block explains this point:

“The woman who refuses to date a man is not guilty of violating his rights — for his rights do not include a relationship with her. That exists as a possibility, but not a right, unless she is his slave. In the same way, a man who wishes to drink in the company of other men is not guilty of violating women’s rights. For women’s rights do not include drinking with people who do not wish to drink with them. It is only in a slave society that this is not so. It is only in a slave society that the master can compel the slave to do his bidding. If the antidiscriminatory forces succeed in forcing their philosophy on the general public they will also succeed in forcing on the public the cloven hoof of slavery.”

In addition, I do want to note that it is quite hypocritical and unfair to allow consumers to act discriminatorily towards producers but to disallow producers from acting discriminatorily towards consumers. An individual may choose to patronize a Mexican restaurant instead of an Italian restaurant (and this decision might even be motivated by racism) and nobody would critique this discriminatory behavior. Furthermore, consumers routinely boycott producers for all sorts of reasons and nobody complains about this clear discriminatory behavior. If the consumer is allowed to choose his/her trade partners, why can the supplier not behave in a similar fashion?

Conclusion

Let me conclude by stating that my belief in the right to discriminate does not mean that I affirm all forms of personal discrimination. However, although I believe that many forms of personal discrimination are clearly wrong, I support a property owner’s right to choose how to utilize his or her property. This is analogous to the first amendment, which protects an individual’s right to speech.2 Although many people use this constitutional right to say offensive, evil, and wrong things, I affirm their right to say these things and would never advocate using government force to silence individuals. In both cases (discrimination and offensive speech), the social and economic forces of boycotting, ostracization, and loss of profits are effective in deterring behavior without violating the rights of the individual.

  1.  Despite not citing a particular book, much of this economic discussion of discrimination was based upon an economics course taught by Dr. Eric Schansberg.
  2. Although I used the first amendment as an example to prove my point, I’m not sure that I would say that the right to speech and the right to property are perfectly synonymous. Specifically, I consider the right to property to be a natural right (i.e. universal, inalienable, and not dependent on government or custom), whereas the right to speech is a constitutional right (i.e. derived from the U.S. Constitution). While this distinction does not lessen the impact of the original comparison, I did want to clarify my perspective.

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