An exceedingly interesting finding, don’t you think?

One of the earliest contributions to the understanding of racial discrimination was Gary Becker’s book The Economics of Discrimination, written in 1957 and based on his Ph.D. dissertation at the University of Chicago. One of Becker’s main contributions in that book was the idea that when an employer discriminates on a basis other than productivity, he misses out. Becker’s point was not that therefore employers would not discriminate but rather that the free market makes them pay a cost for discriminating.

In 1962, Armen Alchian and Reuben Kessel found, consistent with Becker’s model, that when governments regulate firms’ profits, as they do with utilities, the utilities have a diminished penalty for discriminating and, therefore, discriminate more.

That would help to explain why the Bristol bus boycott was against a state owned company…..

15 thoughts on “An exceedingly interesting finding, don’t you think?”

  1. I can see your point, Tim. When I had my quad bypass, I can give you my whole-hearted assurance that the ONLY thing I was interested in was that it should be successful. I was interested to note, after the op, that one of the team of doctors was evidently of Middle Eastern descent, and thus presumably a Mahometan. (As I remember it the head honcho was a Slovak.) My feelings were, they did a good job. I’d recommend them any time.

    But if the decisions are being made by an instrument of the state, the interests of various interest groups eg unions, blacks, whites, women, trans, Moslems etc will influence the management. There won’t be that single minded concentration on the end result that a private firm would display.

  2. yes, this, less productive taste discriminating business will perform less so they pay for any discrimination. But taste discrimination can be monetised. Many prefer indian restaurants to be staffed by indians. The distinction is this works from the consumer end, and business accommodates through segmentation. So the consumer pays- which is how it should be too.

  3. Its possible. You see racial bigotry under pressure when the task is simple, the employee the sole source of value, and the cost of failure severe. Sport,entertainment and music, for example.
    More usually, as we all know ,successful companies can accommodate vast inefficiencies and frequently employ people who are wildly sub optimal. There are in any case plausible arguments for ethnic homogeneity in an organisation and problems with imperfect knowledge at the time of employment.

    The profit motive seeks profit,short term ;profit at that. If child Labour is profitable it will encourage that, if slavery is profitable, it encourages slavery, if dumping external costs is profitable, it will do that,if failing to train its own skilled work force, or even retain its own core assets,is profitable in the short term, it encourages that.

    We do not have child Labour today because of the new post romantic value put upon the child in the 19th century, the non conformist Victorian conscience, and the development of empathy. Charles Dickens alone did more to make this change than the entire industrial revolution.
    The problem at the heart of market fundamentalism is it is obliged to ignore almost every fact we know about what actually happens

  4. The Meissen Bison

    Pneums: – …successful companies can accommodate vast inefficiencies and frequently employ people who are wildly sub optimal.

    This is particularly true of insurance firms.

  5. We do not have child Labour today because of the new post romantic value put upon the child in the 19th century, the non conformist Victorian conscience, and the development of empathy

    Hmm. I honestly wonder how much empathy (as opposed to virtue signalling, which is counterfeit empathy) is in circulation today. Doesn’t seem to be much to spare for victims of abortion or grooming gangs.

    And maybe there’s a connection somehow.

  6. …successful companies can accommodate vast inefficiencies and frequently employ people who are wildly sub optimal.

    Large ones can. Parts of them generate sufficient surplus to permit the continued employment of whole departments of completely useless individuals. Smaller companies, not so much. Bottom line is more affected and the boss can normally see what everyone is doing.

  7. Rob,

    “Large ones can. Parts of them generate sufficient surplus to permit the continued employment of whole departments of completely useless individuals. Smaller companies, not so much. Bottom line is more affected and the boss can normally see what everyone is doing.”

    Even in larger ones (and I have worked in companies where I was a completely useless individual, but not by choice) it isn’t huge numbers. There’s budget management and targets at all sorts of levels. You sometimes get a shit manager who employs their pals but they rarely last long.

  8. “We do not have child Labour today …”

    We don’t? Try going in any asian small shop & you’ll see how much we don’t have child labour.

  9. Bloke in North Dorset

    In government and other tax payer funded bureaucracies its the other way round. Your competence doesn’t they discriminate to meet race and sex targets.

  10. My father explained the Becker point to me when I was a lad. There’s virtually no chance Dad had read his book though. I suspect it’s that frequent phenomenon whereby an idea that’s commonplace among intelligent people is published to great acclaim by an economist and attributed to him as if the idea were original.

  11. Actually it was probably not so much the Bristol Bus Company as the TGWU. They understood that importing cheap labour would reduce their income.

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