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Discrimination imposes an extra cost on the discriminator. In a free market, firms that engage in irrational discrimination will be driven out of business. This

by verteu 13y ago

Discrimination imposes an extra cost on the discriminator. In a free market, firms that engage in irrational discrimination will be driven out of business. This is a central thesis of "Capitalism and Freedom" by Milton Friedman.

interg12 13y ago
It took the government to intervene into a very long running and prosperous "free market" to bring an end to discrimination, and nobody was making a economic case for it.
- pdonis 13y ago
  There was no such "free market" before the Federal government intervened; there was an entrenched system of state and local governments not providing a level playing field. IMO the biggest mistake the civil rights movement made was to ask the Federal government for affirmative action, instead of asking it to guarantee a level playing field, so that minority-owned businesses could simply out-compete businesses run by bigots.
  - djur 13y ago
    Why do you assume that minority-owned or nondiscriminating businesses would run discriminating businesses out of the market? You're assuming, at the very least, that the competitive benefit of nondiscrimination exceeds the barriers to entry in the market.
    - pdonis 13y ago
      You're assuming, at the very least, that the competitive benefit of nondiscrimination exceeds the barriers to entry in the market. Tim Cook was making the same assumption in the article when he said that workplace equality is good for business. Also, the "barriers to entry" came from those state and local government regulations I referred to; asking the Federal government to provide a level playing field would have meant asking the Federal government to force state and local governments to remove those barriers to entry.
    - djur 13y ago
      The barriers I'm referring to aren't Jim Crow but instead the standard barriers to entry: required initial capital, brand recognition, the economies of scale and existing position of the firm currently in the market, etc. I am suggesting that when entering the market is already difficult (which is true of many American industries where discrimination might be a problem), a new firm being nondiscriminatory is unlikely to be a sufficient competitive advantage to displace existing firms. It is possible for nondiscrimination to be beneficial for already existing firms but not an immediate, substantial, and sure-fire competitive advantage.
      - pdonis 13y ago
        How did the already existing firms get into the market and achieve their existing positions? Free market competition, or government regulations that gave them preferential treatment? With a level playing field, I don't think entry into the market is as difficult as you claim for many areas of businesses. The discrimination that the civil rights movement protested against wasn't discrimination about who could build new semiconductor chip fabs: it was about who could ride at the front of the bus, or who could stay at which hotels. In a free market these would be easy businesses to get into; the main barriers to entry are government regulations.
        djur 13y ago
        Companies usually have to grow to a particular size before they're able to negotiate preferential treatment. Even so, I don't believe most industries are less competitive because of regulatory capture. Purely competitive markets are a mathematical abstraction. The ENDA isn't about accommodation discrimination (buses, hotels, etc.), though, it's about employment discrimination. Discriminating against potential customers is obviously bad business, and the competitive benefit for not discriminating might be decisive. Even so, government action was effective in almost entirely eliminating that form of discrimination (to the extent that when it occurs, it's seen as a throwback and an outrage). The barriers to entry for operating a bus service would be enormous even without government regulation. The initial capital outlay is substantial, and established firms would be likely to have lucrative exclusive contracts with businesses. Potential riders would take a long time to trust a new bus service, and it would have to operate at a considerable loss for quite some time to build up a reputation.

by verteu 13y ago

interg12 13y ago

It took the government to intervene into a very long running and prosperous "free market" to bring an end to discrimination, and nobody was making a economic case for it.

pdonis 13y ago
There was no such "free market" before the Federal government intervened; there was an entrenched system of state and local governments not providing a level playing field. IMO the biggest mistake the civil rights movement made was to ask the Federal government for affirmative action, instead of asking it to guarantee a level playing field, so that minority-owned businesses could simply out-compete businesses run by bigots.
- djur 13y ago
  Why do you assume that minority-owned or nondiscriminating businesses would run discriminating businesses out of the market? You're assuming, at the very least, that the competitive benefit of nondiscrimination exceeds the barriers to entry in the market.
  - pdonis 13y ago
    You're assuming, at the very least, that the competitive benefit of nondiscrimination exceeds the barriers to entry in the market. Tim Cook was making the same assumption in the article when he said that workplace equality is good for business. Also, the "barriers to entry" came from those state and local government regulations I referred to; asking the Federal government to provide a level playing field would have meant asking the Federal government to force state and local governments to remove those barriers to entry.
  - djur 13y ago
    The barriers I'm referring to aren't Jim Crow but instead the standard barriers to entry: required initial capital, brand recognition, the economies of scale and existing position of the firm currently in the market, etc. I am suggesting that when entering the market is already difficult (which is true of many American industries where discrimination might be a problem), a new firm being nondiscriminatory is unlikely to be a sufficient competitive advantage to displace existing firms. It is possible for nondiscrimination to be beneficial for already existing firms but not an immediate, substantial, and sure-fire competitive advantage.
    - pdonis 13y ago
      How did the already existing firms get into the market and achieve their existing positions? Free market competition, or government regulations that gave them preferential treatment? With a level playing field, I don't think entry into the market is as difficult as you claim for many areas of businesses. The discrimination that the civil rights movement protested against wasn't discrimination about who could build new semiconductor chip fabs: it was about who could ride at the front of the bus, or who could stay at which hotels. In a free market these would be easy businesses to get into; the main barriers to entry are government regulations.
      - djur 13y ago
        Companies usually have to grow to a particular size before they're able to negotiate preferential treatment. Even so, I don't believe most industries are less competitive because of regulatory capture. Purely competitive markets are a mathematical abstraction. The ENDA isn't about accommodation discrimination (buses, hotels, etc.), though, it's about employment discrimination. Discriminating against potential customers is obviously bad business, and the competitive benefit for not discriminating might be decisive. Even so, government action was effective in almost entirely eliminating that form of discrimination (to the extent that when it occurs, it's seen as a throwback and an outrage). The barriers to entry for operating a bus service would be enormous even without government regulation. The initial capital outlay is substantial, and established firms would be likely to have lucrative exclusive contracts with businesses. Potential riders would take a long time to trust a new bus service, and it would have to operate at a considerable loss for quite some time to build up a reputation.