Government Intervention Springs Eternal for Antidiscrimination Laws

In his Liberty Forum essay, Professor Richard Epstein makes a persuasive case that antidiscrimination laws are “a great mistake outside of monopolies.” But advocates of “antidiscrimination” laws have a view of monopoly—or of “coercion” and “force”—that is much more expansive than Professor Epstein’s. The Progressive or modern liberal advocates of antidiscrimination laws advance a concept of de facto or historical monopoly that justifies antidiscrimination laws pretty much everywhere and trumps freedom of association.

I will assume arguendo that Epstein is talking about genuine “antidiscrimination” laws, not the affirmative action/quota programs that we have all come to know. It is tempting to say that there never were any genuine antidiscrimination laws. (As Henry George wrote to Pope Leo XII about labor union methods, “Those who tell you of unions that raise wages by moral suasion alone are like those who tell you of tigers who live upon oranges.”) But in fact several states did have genuine antidiscrimination laws for 20 years before the federal Civil Rights Act of 1964. They did not produce the equal outcomes that civil rights groups increasingly demanded—though, as Thomas Sowell has pointed out, there was more progress toward racial income equality in two decades before than in the two decades after the Civil Rights Act.

The disheartening fact that equality of opportunity does not produce equal outcomes is what produced color-conscious affirmative action. The urban riots of the late 1960s were regarded as an expression of this frustrating fact. The explanation was that equality of opportunity under traditional antidiscrimination laws did not affect the “present effects of past discrimination,” or what we can call historical discrimination, evidenced by statistical inequality.

In the modern liberal view, a perfect system of equal treatment ignored the fact that history had established a society in which victims of discrimination could not catch up. Early 20th century Progressives had first worked out this theory with regard to labor and capital. Robert Hale wrote a famous essay in 1923 called “Coercion and Distribution in a Supposedly Non-Coercive State.” Fleming James and Friedrich Kessler developed this theory in tort and contract law, claiming that ordinary purchase agreements and especially labor contracts were not truly voluntary. Because all of the bargaining power was on one side, these were “contracts of adhesion.”

This theory found its way into American labor laws, as in the 1935 National Labor Relations (Wagner) Act’s declaration that unions were necessary to redress the “inequality of bargaining power” in an employment-at-will labor market. (Though the egalitarian goal was compromised by the Act’s simultaneous desire to promote “industrial peace.”)

Professor Epstein is quite familiar with this theory, whose story is told by Barbara H. Fried in The Progressive Assault on Laissez Faire (1998). He wrote a review that was nearly as long as, and much more persuasive than, Fried’s book. The Progressive Assault on Laissez Faire is important because modern liberals took its Progressive/New Deal theory and applied it to racial inequality.

The theory has had a great deal more success in the identity politics of modern liberalism than it had in the social class politics of the New Deal era. President Johnson expressed it in his speech at Howard University in 1965:

Freedom is not enough. You do not wipe away the scars of centuries by saying: Now you are free to go where you want, and do as you desire, and choose the leaders you please. You do not take a person who, for years, has been hobbled by chains and liberate him, bring him up to the starting line of a race and say, “you are free to compete with all the others,” and still justly believe that you have been completely fair.

And he famously called for “not just equality as a right and a theory but equality as a fact and equality as a result.”

In its more extreme versions, the theory calls for “reparations,” a payment of some number of trillions of dollars to compensate African Americans for the exploitation of slavery and segregation. It is perhaps most commonly encountered today in the talk of “white skin privilege,” the argument that every white person has benefited from the legacy of white supremacy, even 20th century immigrants and their progeny who had nothing to do with slavery or segregation. The corollary is that every black person can claim victimhood—thus 21st century immigrants from Africa are appropriate beneficiaries of affirmative action, and we can regard Barack Obama to be America’s first black President, regardless of his tenuous connection to the historical experience of most African Americans, most of whose ancestors were brought to the United States even before it was the United States.

Though this theory is not expressed anywhere in the statutes, executive orders, or court judgments that have shaped antidiscrimination law, and is rarely articulated by the architects of affirmative action, I believe it provides the weltanshchauung of our current antidiscrimination regime. In short, to be white is to be a monopolist, or a shareholder in a racial monopoly. The white race is a cartel, a conspiracy in restraint of trade and of everything else. So-called “freedom of association” is really a license to oppress others. If the term had not already been appropriated, we could call this theory “racism,” the attribution of all inequality and group misfortune to this cartel.

Of course, there were more than enough real examples of monopolies that were used to protect racial groups from competition, and these provided the plinths upon which affirmative action was raised. Labor unions excluded blacks and acted as “white job trusts,” but this did not have much of an effect until the federal government enabled unions to enforce their cartels in the Wagner Act and other statutes. Then antidiscrimination acts were used to mitigate the ill-effects of those exclusions.

Law professor Owen Fiss expressed the phenomenon in 1971. “The need for a fair employment law arises in part from the existence of other laws (such as minimum wage laws, laws protecting union hiring halls, laws limiting profit levels, and laws limiting entry) that impair the effectiveness of the market,” he wrote. “By interfering with the market, these laws impair the capacity of the merit principle to protect itself. The need for the fair employment law, to the extent that it arises from statutes with a contrary effect, may simply reflect society’s reluctance to abandon these other forms of government regulation—it wishes to have its cake and eat it too.”[1]

Indeed, “affirmative action” arose quite specifically from an effort to remedy “historic” discrimination by monopolistic labor unions. As early as the 1940s, the federal courts recognized that the Wagner Act (and other pro-union legislation like the Railway Labor Act of 1926) had given unions monopoly power—akin to the sovereign power of the government itself, the Supreme Court noted. Thus, they had the same duty to protect minority rights that bound the government under the Fourteenth Amendment.

This duty of “fair representation” was hardly enforced for the next 20 years. Moreover, black union members who pursued complaints through the administrative process found that the National Labor Relations Board (NLRB) consistently took the side of white-dominated unions. As Arthur Fletcher, an assistant Secretary of Labor in the Nixon administration, observed, if fair representation had been enforced, the employment title of the Civil Rights Act of 1964 would not have been necessary.

At the same time, Presidents from Franklin D. Roosevelt on issued executive orders that required employers doing business with the federal government to agree not to discriminate on the basis of race. The particular problem of union discrimination contributed to the frustration of this “fair employment” effort (the contractors claimed that they could not control the practices of the unions they had to deal with), and led the executive branch (through the Department of Labor) to move beyond mere non-discrimination toward affirmative action. The phrase “affirmative action,” first used in the Wagner Act, was applied to racial discrimination in President Kennedy’s 1961 executive order. The first forays into racial preferences could be seen as early as the last years of the Eisenhower administration and again at the end of the Johnson administration. But they really took off as the “Philadelphia Plan” under President Nixon.

The Philadelphia Plan arose out of the egregious exclusion of blacks from the unionized skilled construction trades in that city. (Just last month, the New York Times featured a story of the continuing saga of this discrimination in the sheet metal workers union in New York.) The Labor Department began to require contractors to establish “goals and timetables” to increase minority group participation—de facto racial quotas. Nixon then applied the Philadelphia Plan to other cities, and finally to all federal government contractors, who employed about half of all American workers. He also scotched an effort by Congress to end the program. Affirmative action became so entrenched in American corporate culture that President Reagan’s supporters in big business urged him to keep it in place.

The Civil Rights Act of 1964 was written in terms that required color-blind equal treatment by all employers, regardless of whether they wielded monopoly power or not. As Professor Epstein points out, this appeared to act as “an impediment to private actions” of race-conscious affirmative action, which non-monopolistic employers would enjoy in a regime of freedom of association. He goes on to say that the Supreme Court decision in United Steel Workers of America v. Weber (1979) “made it appear as if the right to run an affirmative action program was a special privilege conferred upon one group instead of an ordinary business decision that any firm or association could make for itself.”

This privilege, too, grew out of cases concerning discrimination by unions. Although the quota system adopted by the Kaiser Aluminum Company in the Weber case (a 50 percent quota for admission to a skilled-training program) was called “voluntary,” it was in fact adopted under pressure from the Labor Department. Weber told employers that they could adopt race-conscious policies and not be liable to “reverse discrimination” suits by whites.

The courts added to the affirmative action efforts of the Labor Department, especially by altering union seniority systems. The Civil Rights Act forced unions to end segregation and discrimination, finally giving statutory and administrative enforcement to the “fair representation” doctrine. (Without the slightest blush of shame, the NLRB declared racial discrimination to be an “unfair labor practice” one day after Johnson signed the Civil Rights Act.) But what would be the effect on white workers who had accumulated seniority during the previous generation? The courts compelled them to take into account “the present effects of past discrimination”—in short, to deal with historical discrimination.

These cases paved the way for the “disparate impact” definition of discrimination. In the 1970 case of Griggs v. Duke Power Co., the Court held that tests that screened out a disproportionate number of minority group members would be assumed to be discriminatory, and could not be used unless the employer could prove that they were all but indispensable. “Discrimination” no longer meant the intentional unequal treatment of an individual; it was any policy that perpetuated the effects on racial groups of past discrimination. Though the Griggs case was not a union discrimination case, it essentially took the union-derived “present effects” doctrine and spread it to all employment cases, just as the union-derived Philadelphia Plan “affirmative action” system metastasized through all of the government-contracting world.

“Antidiscrimination” laws are another illustration of what M. Stanton Evans calls “the phenomenon of self-generating interventions,” where one government intervention sets the stage for still further ones. Ludwig von Mises had described this tendency in his Critique of Interventionism (1929) and other works. (The Federal Reserve Board is the outstanding example of the phenomenon. Its control of the money supply causes financial crises that lead Congress to give it more power.)

One can say that it all began with 17th century slavery and the state apparatus needed to enforce it. After slavery, it was segregation. Then antidiscrimination laws had to adjust for prior state intervention of behalf of labor unions. At about that point it became well nigh impossible to confine antidiscrimination laws to an antitrust domain. Rather, it now looks likely that they will continue to expand and to take into account the historical grievances of other groups. The upshot: Woodrow Wilson’s name now needs to be expunged from the Princeton campus because he advocated segregation. No doubt more such demands are to follow.

This is a grim prospect for advocates of constitutional liberty. It’s not the best, and probably not even the second best, but it may be the best we can have expected. It is certainly better than a lot of other multi-racial countries have done, and better than what many of the Founders feared. Thomas Jefferson in his Notes on the State of Virginia (1785) imagined what society would be like after slavery:

Deep rooted prejudices entertained by the whites; ten thousand recollections, by the blacks, of the injuries they have sustained; new provocations; the real distinctions which Nature has made; and many other circumstances, will divide us into parties, and produce convulsions, which will probably never end but in the extermination of the one or the other race.

Liberals today would credit Jefferson for seeing that white prejudice would continue forever, though they would condemn his implication that Nature had provided the basis for those prejudices. In their view, prejudice must be the result of History, not Nature, and what happened more than justifies the “ten thousand recollections” that fuel black rage. What Jefferson failed to anticipate is the phenomenon of white guilt, the remarkable degree to which whites (elites and intellectuals, at least) share those recollections. (This posture was immortalized in 1970 in Tom Wolfe’s essay, “Radical Chic.”) And it is this historical understanding, this “narrative,” that is the basis of antidiscrimination policy today.

[1] Owen Fiss, “A Theory of Fair Employment Laws,” University of Chicago Law Review 38 (1971), 251.