[Paleopsych] Forbes: Peter Brimelow and Leslie Spencer: When quotas replace merit, everybody suffers
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Tue Jun 7 21:17:51 UTC 2005
Peter Brimelow and Leslie Spencer: When quotas replace merit, everybody suffers
[Note the date on this. Has there been any attempt to update it?]
"Quota games . . . math games . . . bean counters!"
President-elect Bill Clinton had every reason to lash out at feminist groups
at his Dec. 21 news conference. In fact, he had been bean-counting busily
himself: According to widespread reports, some of his original Cabinet picks
were bumped because they were the wrong sex or race, key constituencies like
urban Catholics and supporters of Israel have been crowded out, and his entire
appointment process has been seriously slowed. But now mindless feminist
pressure was forcing him to admit the ultimate contradiction of all such
affirmative action policies: "Diversity" can conflict with merit.
Above all, the President must know the issue is death for the Democrats: His
own pollster, Stanley Greenberg, conducted the post-1984 focus group interviews
that found opposition to quotas was key to the defection of white working-class
voters. (The party promptly suppressed Greenberg's report and now uses only
happy-talk such as "looking like America." But a quota by any other name is
still a quota.)
If quotas are clogging the Clinton transition, what are they doing to the
economy? The subject went unmentioned, needless to say, at Clinton's two-day
economic summit in Little Rock. In fact, it has gone virtually undiscussed
throughout the quarter-century of bureaucratic and judicial decrees that have
effectively transformed the color-blind 1964 Civil Rights Act into a pervasive
Ironically, just as socialism has collapsed across the globe, the leading
capitalist power has adopted a peculiarly American neosocialism, putting
politics (and lawyers) in command of its workplace, albeit on the pretext of
equity rather than efficiency. Says Edward Potter of the Washington,
D.C.-based Employment Policy Foundation: "We have, without doubt, the most
far-reaching equal employment laws found anywhere in the world."
Before applauding Potter's sweeping statement, stop for a minute and ponder
this question: What does the replacement of merit with quotas cost the American
people? The answer is: plenty. The impact may easily have already depressed
GNP by a staggering four percentage points -- about as much as we spend on the
entire public school system.
Quotas are not the law of the land, exactly. They are explicitly banned in
both the 1964 and 1991 Civil Rights Act. Nevertheless, corporate America has
been terrorized by the legal legerdemain whereby any statistical disparity
between work force and population is equated with intentional discrimination.
Throughout American business, newly entrenched affirmative action bureaucrats
are enforcing discrimination by race and sex -- in favor of the "protected
classes" (women, minorities and, most recently, the disabled) -- as decreed by
One such bureaucrat, Xerox Manager of Corporate Employment Theodore Payne,
puts it bluntly: "We have a process that we call 'balanced work force' in
Xerox, everybody understands that, and it's measurable, it's goals. . . .
Relative numbers. Relative numbers. That's the hard business, that's what
most people don't like to deal with, but we do that all the time."
"Balanced work force" is, of course, yet another euphemism for quotas. Payne
is apparently saying that Xerox discriminates against white males in favor of
the "protected classes." He says it without apology. But, if anyone cares,
white males have feelings (and families to support), too.
"To cut whites out of the entire process is racism pure and simple," laments
a white male reporter for the San Antonio Light, which is due to close down any
day. He says Gannett and other major news organizations are showing interest
in his Hispanic colleagues exclusively. But he adds: "I don't want to be
quoted. I'll never find another job if I am."
In a blistering 1987 article in Society magazine, the late Professor William
Beer of Brooklyn College described his fellow social scientists' attitude to
affirmative action as one of "resolute ignorance." FORBES' search of academic
journals and Ph.D. theses confirms that ignorance has remained resolute. What
little work has been done tends to focus only on whether affirmative action
policies have benefited the "protected classes." (Have they? For an answer,
Corporate America contributes to this resolute ignorance by declining to
disclose its costs. "Our members would never say," the National Association of
Manufacturers' Diane Generous predicted (rightly). "They would be concerned
they might be accused of complaining about how much money they had to spend on
Another big business lobby, the Business Roundtable, did publish a study by
accountants Arthur Andersen more than a decade ago on how much its members
spent to comply with federal regulation, including specifically the Equal
Employment Opportunity Commission (EEOC). But today a Roundtable spokeswoman
says the organization has no plans to update the study -- and that it no longer
even possesses any copies.
Sure, measuring the costs of regulation is difficult. But it can be done.
For example, the Environmental Protection Agency is required by executive order
to make regular estimates of its economic impact.
So here is a rough but reasonable try at figuring the cost of quotas. That
funny noise you hear from now on is economists gritting their teeth. Our
response to them: Go make your own estimates. And remember -- the truth shall
set you free.
Two points about quotas emerge immediately:
Quotas are a very big deal. All employers with more than 15 staff, public,
private or nonprofit, come under the EEOC's Uniform Guidelines on Employee
Selection Procedures. All can be sued by the EEOC for "discrimination" if the
racial, ethnic and sex mix of new hires diverges sufficiently from that of all
other qualified applicants -- for example, if the percentage of blacks hired is
lower than the percentage of blacks applying. That covers 86% of the entire
nonfarm private-sector work force.
Additionally, more than 400,000 corporations doing business with the federal
government, covering about 42% of the private sector work force, have to file
with the Office of Federal Contract Compliance Programs (OFCCP). This process
is so onerous that the OFCCP's explanatory manual is about 700 pages long.
Corporations with contracts of $ 50,000 or more must develop an "affirmative
action plan" aimed at achieving staffing at all levels that is proportionate to
the composition of the qualified work force.
Many colleges and universities are subject to no fewer than three federal
agencies: EEOC, OFCCP and the Department of Education's Civil Rights Office.
And finally, there are federal, state and local governments. Here a racial and
gender spoils system has effectively subverted the merit hiring rules so
painfully established by Progressive Era reformers at the beginning of the
All of which means that the 1984 poll that found one in ten white males
reporting they had lost a promotion because of work quotas was quite possibly
accurate. Indeed, it could be an underestimate. Quotas have been implemented
with extraordinary secrecy and deceptiveness, in part because of their dubious
"Word comes down, but it does not go out," says Claremont McKenna College
sociologist Frederick Lynch, author of the only study on the impact of quotas
on white males, Invisible Victims. He cites a Los Angeles manufacturer whose
receptionist was instructed to accept but quietly shelve employment
applications from whites and Hispanics -- after they had left the room --
because the plant did not have "enough" blacks.
Typical of the secrecy and scale of quotas: the "race-norming" saga. EEOC
Vice Chairman R. Gaull Silberman -- a Reagan appointee -- says that until she
read it in a newspaper in 1990, she and EEOC Chairman Evan Kemp had "absolutely
no idea" that their own agency was pressing for aptitude tests to be
race-normed. This bit of bureaucrat-speak refers to the practice of radically
adjusting scores to compensate for minorities' systematically lower results.
Yet race-norming had been going on throughout the 1980s. It reportedly
subjected at least 16 million test-takers to a quota system they knew nothing
After public outcry, race-norming was banned in the 1991 Civil Rights Act.
But quotas, like vampires, have proved virtually impossible to kill. Now they
seem to be rising from the grave in the shape of a new test-twisting technique
called "banding" -- concealing differences in performance by lumping ranges of
The second point about quotas:
Quotas are very expensive. There's surprising denial about this. University
of Chicago free market economist Gary Becker, a 1992 Nobel laureate, wrote the
standard analysis, The Economics of Discrimination (1957). But Becker recently
shrugged off affirmative action in a Business Week column. He argued that
although affirmative action "does hurt some individuals, as it caters to
minorities with political clout," it "probably causes less harm than many other
programs" such as farm supports.
Strangely, however, Becker tells FORBES that in fact he has no idea what
quotas cost ("I think it's an important subject for research"). But we do know
what farm supports cost: about $ 9.7 billion in 1992, which is substantially
lower than our estimate of $ 16 billion to $ 19 billion for private-sector and
education compliance costs alone (see p. 82).
Nevertheless, Becker's analysis of discrimination remains the best framework
for assessing the economic impact of quotas:
In a free market, Becker argued, there is an inexorable tendency for
everyone to receive the marginal value of his or her labor. This means that
ultimately, you are likely to be paid something like what your work is worth.
If you belong to an unpopular group, employers may pay you less. But that
means that they will make more money off you. Because you are such a
profitable hire, you will come into demand, and your labor will be bid up.
This process can only be prevented by monopoly or government intervention --
both of which happened, for example, in South Africa under apartheid. And now
in the U.S. under affirmative action.
Talking to FORBES, Becker is very anxious to stress that he is not saying
discrimination will be completely competed away. But there is a tendency for
it to be competed away. "Competition forces people to face the costs, and
therefore reduces the amount of discrimination, when compared with a
monopolistic or noncompetitive situation," Becker says.
If you believe that racism stalks America like the Angel of Death and that
only federal force can keep it in check, you won't like what Becker is saying.
But the evidence clearly supports him.
"Once adjustments are made for factors like age, education and experience,
70% to 85% of the observed differences in income and employment between the
various groups in America disappears," says economist Howard R. Bloch of George
Mason University. "That's been shown by studies dating back to the mid-1960s.
And you can't even be sure that the residual gap is due to discrimination. It
could be due to factors we haven't controlled for."
Indeed, Harvard economist Richard Freeman fund blacks and whites with the
same backgrounds and education had achieved wage parity by 1969, well before
quotas had America in their grip.
Even the recent much-touted Federal Reserve Bank of Boston study claiming to
prove the existence of racial discrimination in mortgage lending turns out to
have made a basic methodological error in its handling of default rates
(FORBES, Jan. 4). Perhaps, significantly, its coauthor, Boston Fed Research
Director Alicia H. Munnell, was a featured speaker at the Clinton economic
All of which shows the fallacy of two common arguments for
government-imposed quotas: that they are necessary to force corporations to tap
new pools of labor, and that corporations need a diverse work force to service
an increasingly diverse population. Both simply assume that markets don't
operate -- that corporations couldn't figure this out themselves.
In fact, it's hard to see any benefits contributed by quotas to the overall
economy -- as opposed to the benefits they channel to the "protected classes."
"Affirmative action is a fairly pure form of rent-seeking," says the University
of Arizona's Gordon Tullock, using the concept he developed for special
interests' use of political power to extract subsidies for themselves from the
economy. "There simply isn't any other economic rationale."
"In 1987 EEOC's local field office wrote me a letter saying they had reason to
believe I didn't have enough women 'food servers' and 'busers.' No woman had
complained against me. So the EEOC advertised in the local paper to tell women
whose job applications we had rejected -- or even women who had just thought of
applying -- that they could be entitled to damages. Twenty-seven women became
plaintiffs in a lawsuit against me. The EEOC interviewed me for hours to find
out what kind of person I was. I told them in Sicily where I came from I
learned to respect women. I supplied them with hundreds of pounds of paper. I
had to hire someone full time for a year just to respond to EEOC demands. Six
months ago I finally settled. I agreed to pay $ 150,000 damages, and as jobs
open up, to hire the women on the EEOC's list. Even if they don't know what
spaghetti looks like! I have to advertise twice a year even if I have no
openings, just to add possible female employees to my files. I also had to
hire an EEOC-approved person to teach my staff how not to discriminate. I
employ 12 food servers in these two restaurants. Gross sales, around $ 2
million. How much did it all cost me? Cash outlay, about $ 400,000.
What the government's done to me -- devastating. I wouldn't wish it on my
worst enemy." -- Thomas Maggiore, Owner of Tomaso's and Chianti restaurants,
Economists break the cost of regulation into three parts:
Direct Costs: the EEOC's outlay of taxpayers' money in regulating and suing
Thomas Maggiore, and the money he spends in fines, damages, filling in forms,
advertising and otherwise complying with EEOC demands.
Indirect Costs: the time and overhead Maggiore has to divert from other
activities to argue with the EEOC, do the continuing paperwork, sit through
sensitivity training, reorganize his workplace and his methods of operating.
Opportunity Costs: what Maggiore might have achieved if he had been allowed
to invest his time and money as he wanted; the loss to the Phoenix-area economy
if he gives up and goes back to Sicily.
Remember: Thomas Maggiore is precisely the kind of small business person the
politicians claim they want so badly to help.
Let's look at some numbers.
Direct costs: One guess of private sector compliance costs for affirmative
action: In 1977 Business Roundtable members spent $ 217 million complying with
equal opportunity regulations. They employed 5% of the nonfarm work force;
OFCCP regulations cover 42% of the private workforce, implying total costs of $
1.8 billion. Adjusted for inflation, that's a current $ 4.2 billion.
Second guess: In 1981 a study by the Senate Labor & Human Resources
Committee suggested compliance costs for the largest 500 companies of about $ 1
billion. That's $ 1.8 billion extrapolated over the OFCCP universe. Adjusted
for inflation: $ 2.8 billion.
Neither of these figures includes the EEOC's impact, although it is by far
the larger bureaucracy. But the guesstimates are in line with the rule of
thumb developed by regulation-watchers from the Center for the Study of
American Business at Washington University in St. Louis: Every dollar spent on
regulatory enforcement inflicts about $ 20 in compliance costs. By FORBES'
count, the federal government spent some $ 425 million on civil rights
oversight in 1991, of which about $ 303 million appears to be directed at the
private sector. Implied private-sector compliance cost: $ 6 billion.
To get an estimate of compliance costs in colleges and universities, FORBES
turned to John Attarian, a writer and economics Ph.D. who has analyzed the
budget of his alma mater, the University of Michigan. Under its "Michigan
Mandate," the university is devoting much effort to the recruitment and
retention of the "protected classes."
Attarian says about 2.5% of the University of Michigan at Ann Arbor's
general budget appears to be devoted to this cause. This does not capture
costs buried in department budgets, such as for recruitment. (Minor example:
Advertising faculty posts in special minority-oriented publications costs over
twice the usual rate.) Still, extrapolated across the estimated $ 164 billion
spent on U.S. higher education in 1992, this suggests total compliance costs of
$ 4.1 billion.
If the same relationship holds true for the $ 261 billion spent on public
and private schools in 1992, their compliance costs would be $ 6.5 billion. Of
course, the problems of schools are different from those of colleges. They may
be worse. Busing for racial balance has reportedly caused some school
districts to spend over a quarter of their budgets on transportation.
Quotas are just another excuse for the American academic establishment to
eschew scholarship for social engineering. Thus, a long survey of "minorities
in science" in the Nov. 13 issue of Science magazine reported that the National
Science Foundation, which is supposed to be funding research, has spent a
staggering $ 1.5 billion in the last 20 years on fostering black scientists.
The magazine describes the results as "dismal."
State and local governments also face compliance costs -- and they also
inflict them on the private sector. New York State, for example, spent $ 10.5
million complying with its own and federal laws last year, and $ 7.5 million on
"civil rights" enforcement. In 1990 state and local governments spent some $
835 billion. Implied total expended on quota compliance and coercion, given
New York's rate: $ 287 million. Additional private sector compliance costs,
given New York's enforcement costs and applying CSAB's 20-to-1 rule of thumb: $
Note that we include no estimate of what it costs the federal government to
comply with its own regulations.
We like to be moderate.
Private-sector compliance costs are apparently much exacerbated by the
federal enforcers' arbitrary and erratic behavior. Some rare case studies
appeared in the September 1992 issue of the American Academy of Political &
Social Science's journal Annals. One victim reported supplying documents nine
times because the OFCCP kept losing them. Another, the National Bank of
Greenwood, Ind. -- $ 117 million assets, 138 staff, full- and part-time -- was
subject to a grueling and chaotic two-year audit, costing more than $ 100,000
and 4,000 staff hours, although no complaint had apparently been lodged against
it. Later the bank was audited twice more, again apparently without any
complaints being lodged. Typically, the Indianapolis-based Merchants National
Corp., which has meanwhile taken over the National Bank of Greenwood, refused
to allow its officers to talk about the experience.
Total direct costs: $ 16.5 billion to $ 19.7 billion. Or about $ 300 per
family of four. Compare it with the $ 20 billion of "infrastructure spending"
Clinton has promised to kick-start the economy. And this is just the tip of
Indirect Costs are the part of the iceberg just under the water --
easily-seen but involving no direct cash outlay.
"It takes me 50 extra hours to make every faculty hire because of the need
to comply with affirmative action rules," says Professor Herbert London,
formerly Dean of New York University's Gallatin Division, "even when I end up
hiring the person I wanted to hire in the first place."
Naturally, this cost does not appear as a cash item in NYU's operating
budget of $ 627 million, excluding the medical school. (The two-person
affirmative action office costs just $ 172,000 -- or about $ 6.50 per full-time
student -- although a spokesman tells FORBES that over a hundred people deal
with minority recruitment every day.) Nevertheless, the cost is real.
A measure of these indirect costs is provided by the single Ph.D. thesis
FORBES found that investigated costs, by Peter Griffin, now assistant professor
at California State University at Long Beach. Griffin's rarefied econometric
analysis concluded that by 1980, OFCCP regulation had increased federal
contractors' labor and capital costs by an average of 6.5%. (As compared with
noncontractors -- although actually their costs would also have been increased
by EEOC requirements.)
The implications of this are substantial. OFCCP regulation covers about 42%
of the civilian work force. The contractors' cost of labor alone exceeded $
1.4 trillion. The minimum cost of quotas to them, based on Griffin's
methodology: about $ 95 billion -- 1.7% of GNP.
And the cost to the federal taxpayer is heavy. In 1991, $ 211 billion was
expended on federal contracts with non-government entities. The additional
costs inflicted by affirmative action regulation that Griffin's work suggests
this sum incorporates: some $ 13 billion.
Which is on top of the damage inflicted on the taxpayer by "set-asides," the
reserving of some portion of federal work entirely for contractors from the
"protected classes." About $ 10 billion of federal contract monies were
channeled in this way last year. The premium paid is not supposed to go over
10% (although FORBES has heard of premiums as high as 25%). Additional quota
tax: perhaps $ 1 billion.
Ironic set-aside fact: The law is confused about this type of quota too. In
Richmond v. Croson (1989), the Supreme Court ruled that many of the 234 state
and local government set-aside programs were unconstitutional, unless actual
discrimination could be proved. Local politicians, anxious to continue handing
out the pork, instantly created a minor "disparity studies" industry to make
the case that discrimination against minorities was widespread. In a detailed
account in the January1993 issue of Public Interest magazine, University of
Maryland at Baltimore Professor George La Noue estimates that at least $ 13
million taxpayers' money had been fed into this young industry by June 1992,
with another $ 14 million commissioned by the federal Urban Mass Transit
Authority alone. Atlanta spent $ 532,000 for a 1,034-page report coauthored by
Ray Marshall, the Carter Administration's Secretary of Labor.
Expensive? Well, proving discrimination is hard work. Most localities have
long been legally required to accept the lowest bid -- a Progressive-era reform
aimed precisely at patronage-hungry politicians. And, significantly, cities
like Atlanta, which now want to claim they discriminated, have actually been
under black political control for years.
Even more ironic set-aside fact: This type of quota has created another
industry -- corruption. A prime contractor can set up his black electrician,
for instance, in "business" as a purchaser. The electrician needn't have
credit or contacts with suppliers. He just takes 5% off the top. One "native
American " contractor in Tulsa reportedly had blue eyes and an Irish name but
had managed to join the Cherokee Nation of Oklahoma on the strength of an
alleged great-great-great-great grandparent.
These abuses can only be checked by more supervision. But minority
contractors have been quoted complaining the program is too bureaucratic
Astoundingly ironic set-aside fact: According to Professor La Noue, over
one-half of the Small Business Administration's set-asides go to groups that
are composed largely of first- or second-generation immigrants. He suspects
the same is likely to be true for all set-asides. In Washington, D.C. -- where
an amazing 90% of the city's road construction contracts have been set aside --
one of the largest beneficiaries has been the Fort Myer Construction Corp.,
owned by a family of Portuguese origin who qualify as Hispanics because they
emigrated from Argentina.
Absurdly, all immigrants who fall into the "protected classes" qualify for
all U.S. quota programs. Which is a pretty clear indication that quotas are not
about righting past wrongs at all, but about asserting political power over the
A further indirect cost of the affirmative action system: litigation. (You
thought massive regulation would preclude litigation? This is America!)
The number of discrimination suits in federal courts is rising
astronomically -- by 2,166% between 1970 and 1989, when some 7,500 were filed,
versus an increase of only about 125% in the general federal caseload.
Significantly, suits about discrimination in hiring used to outnumber suits
about firing. Today it's the reverse, by a factor of three or more. It's
obviously absurd to suppose the same employer discriminates in firing but not
in hiring. The civil rights frenzy has simply led to a more litigious, as well
as politicized, workplace.
Example: Alabama state law required the Lamar County Board of Education to
fire a black teacher after she failed a mandatory competency test five times
during the three years allowed. She alleged discrimination because the test
failed a disproportionate number of blacks. A judge reinstated her with three
years' back salary.
And it's going to get much worse. Preliminary reports are that since the
1991 Civil Rights Act and the 1990 Americans With Disabilities Act (which few
people yet realize is also a quota bill) filings have jumped some 30%. Both
acts for the first time allow punitive damages, an explicit incentive to
contingency-fee trial lawyers.
Opportunity Costs are the base of the quota iceberg, down in the murkiest
depths. Unlike the direct and indirect costs of regulation, they don't show up
in GNP statistics. They represent what GNP could have been if these more
tangible costs have been spent differently -- for job-creating investment, say,
or for education. But these indirect costs are the most massive of all. For
Having the wrong people in the wrong jobs. Corporate America seems to have
resigned itself to quotas as yet another tax. But they are a peculiarly
debilitating sort of tax, levied not on the bottom line but on every phase of
the corporation's activities, increasing inefficiency throughout. Most taxes
are a burden to be shouldered. This is an enfeebling drug.
That affirmative action quotas lead to lowered standards is all but
guaranteed by the fact that all standards are suspect to Equal Employment
enforcers. "Many of these people believe there really is no such thing as job
performance or productivity objectively defined, that it's really just a matter
of one's cultural definition or cultural orientation," says Frank Schmidt, a
University of Iowa industrial psychologist. Increasingly, they have been able
to impose this view on American business.
The civil rights revolution has also virtually aborted the use of tests
devised by industrial psychologists, which in the 1950s promised to make
employee selection a science. Tests came under attack because minorities
typically scored lower on them. Today they are only used, it at all, after
work-related validation studies that can cost millions of dollars.
Industrial psychologists, however, have gone on believing in their work.
Schmidt and John Hunter of Michigan State University have produced numerous
studies showing that hiring the able results in enormous productivity
increases. Today, Hunter estimates that total U.S. output would be about $ 150
billion higher if every employer in the country were free to use tests and
select on merit. That's about 2.5% of GNP.
Effect on morale. Poor hiring shows up not merely in poor decisions but also
in poor morale. Quotas, like income tax (and unlike farm supports), have an
immediate and dramatic impact on incentives.
Frank Schmidt put it like this: "When the less competent employees reach a
critical mass, their lower performance standards become the standards of the
organization." The longer-established employees who are quipped for the job
abandon their old high standards and conform to the new, lower ones.
Schmidt and Hunter made no estimate of the impact of this phenomenon. But
they have speculated that it lay behind the U.S. productivity stall of the
1970s, as the first effects of the war against testing were being felt.
Misallocation of resources. Monies expended to meet the costs of affirmative
action cannot be spent on research and development and plant-modernization.
The effect of this is cumulative: The growth path of the economy diverges,
permanently and increasingly, from its potential. Thus we estimate that an
extra $ 113 billion in direct and indirect costs have been inflicted on the
economy annually since 1980. A standard calculation converts this into an
estimate of GNP shortfall because of affirmative action: about 1.5 percentage
points by 1992.
GNP in 1991 was about $ 5.7 trillion. The total shortfall quotas may
already have caused comes to some 4%. That's well over $ 225 billion, money
that could buy a lot of social programs. Or finance a good deal of
So quotas cost a lot. But do they do any good at all?
Quotas have obviously failed to prevent continuing catastrophe in much of
black America. Prevailing taboos make this subject difficult to discuss. But
the distressing facts are powerfully summarized in a remarkable new book, Jared
Taylor's Paved With Good Intentions: The Failure of Race Relations in
Contemporary America (Carrol & Graf). In 1950 only 9% of the black families
were headed by a single parent; in 1965, 28%; now, fully half. In 1959 only
15% of black births were illegitimate; in 1992, 66%. One in four black men in
their 20s is either in jail, on probation or on parole. Clearly, affirmative
action has done nothing to reverse the dismal trends.
Quotas have not decisively improved overall black employment. "Despite all
the controversies surrounding affirmative action," says Queens College
Professor Andrew Hacker, a supporter of quotas, in his bestselling Two Nations:
Black and White, Separate, Hostile, Unequal, "fewer blacks now have steady jobs
of any kind and their unemployment rates have been growing progressively worse
relative to those recorded for whites."
Quotas' effect on black incomes appears at best mixed. Between 1970 and 1990
black median family income, adjusted for inflation, crept snail-like from $
21,151 to $ 21,423. But the proportion of black families earning above $
50,000 jumped sharply, from about 10% to nearly 15%. Dragging down the median:
the increase in black families receiving below $ 15,000, now nearly 40%. So
quotas may have helped create a black middle class (although educated blacks
might have done well anyway; after all, the proportion of white high income
families also rose in this period). But the black poor have not benefited.
Quotas in colleges have not prevented the gap between black and white
college participation from widening in the 1980s. By 1976 some 22.6% of black
18-to-24-year-olds enrolled in college, compared with 27.1% of whites.
Thereafter black participation declined, then recovered. In 1990, 25.4% blacks
enrolled, but meanwhile white participation had grown to 32.5%.
And although crude enrollment numbers are dear to the hearts of college
admissions officers, they conceal tragic differences in attrition. For
example, only 37.5% of blacks enrolling at Berkeley in 1983 had graduated five
years later, compared with 72% of whites. Critics argue that top colleges burn
out black students by irresponsibly recruiting them to fill quotas, when they
could be successful at less high-pressure schools.
Quotas may have improved the status of women -- or they may not. It's
easiest to show that women have gained in the last decades -- ironic, because
their plight was hardly as serious as that of blacks, with whom they are now
competing. Women's share of professional degrees grew from 2.7% in 1960 to 36%
in 1990, and their average earnings as a percentage of men's has increased from
61% to 72% over the same period.
But quotas may not be responsible. Female participation in the work force
has fluctuated widely for generations, correlated with demographic factors like
marriage and fertility rates. For example, the Hoover Institution economist
(and FORBES's columnist) Thomas Sowell has noted that woman earned 17% of Ph.D.
's in 1921 but only 10% in the early 1960s. Amazingly, as long ago as 1879
women constituted 40% of all college faculty and administrators. Many of these
colleges were women-only, but they could still be highly competitive: In 1902
the proportion of women listed in Who's Who was more than double that in 1958.
This problem of apportioning credit bedevils the whole quota debate and,
indeed, the entire subject of government-mandated social change. Looking back
on the 1964 Civil Rights Act and its controversial enforcement, the American
Enterprise Institute's Charles Murray, author of Losing Ground and In Pursuit,
offers this startling thought: "There's hardly a single outcome -- black voting
rights, access to public accommodation, employment, particularly in
white-collar jobs -- that couldn't have been predicted on the basis of pre-1964
trend-lines." That's pretty devastating. It suggests that we have spent
trillions of dollars to create an outcome that would have happened even if the
government had done nothing.
From an economic standpoint, quotas work rather like an older form of
American neosocialism: price and wage controls. They may seem to produce the
desired result. But they could equally well just be simulating it, or even
Meanwhile, of course, the economy suffers.
It may be that before America can talk rationally about race, the generation
that remembers segregation will have to die off. And we're not talking about
liberals. FORBES asked Gary Becker, 62, what he thought would be the ideal
public policy in this area.
Becker: I prefer to pass on that one. I have views on it, but I don't want
to talk about it at this moment.
Oh. Why not?
Becker: Well, let me just make that judgment. I prefer not to.
Becker's University of Chicago colleague Richard A. Epstein, 49, seems to be
less nervous about his popularity in the Faculty Club. His book Forbidden
Grounds: The Case Against Employment Discrimination Laws argues that the modern
civil rights laws are flawed to their heart because in negating freedom of
association they have inexorably led to government coercion that threatens
markets and, ultimately, liberty.
"At bottom are only two pure forms of legislation -- productive and
redistributive," Professor Epstein argues. "Antidiscrimination legislation is
always of the second kind. The form of redistribution is covert; it is
capricious, it is expensive and it is wasteful."
And Epstein makes the key economic point: If we want to subsidize a
"protected class," he writes, it can be done more efficiently by just giving
"I have a dream," Martin Luther King Jr. said 30 years ago, "that my four
little children will one day live in a nation where they will not be judged by
the color of their skin, but by the content of their character."
As bean-counting has displaced merit in America, that day is further off
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