Mon, 31 Oct 2005

Jim Crow

Several people have remarked on Jim Crow laws lately: Don Boudreaux at CafeHayek, Thomas Sowell, and myself. Edwin writes to me saying that he thought Thomas Sowell got to the point better, which is that free markets don't tolerate discrimination. He is quite right.

Any kind of interference in the free market which does not favor one party over another will never be favored by businessmen for two reasons. First, because it's always possible that a competitor will cheat on the sly. Regulations only regulate the honest businessman. Second, because any regulation which requires modified behavior imposes a cost, and only rarely is this cost compensated-for. Perhaps the cost is a one-time cost in the form of retraining staff members. More likely the cost will be ongoing.

A non-economist might say "but everyone has that cost imposed on them, so it's perfectly fair." No, it's not. Everything has a substitute. Before we had FedEx, time-critical packages were hand-carried on airplanes. When I was a chip designer at HP, an engineer would fly down to the Bay Area to pick up her masks. People can still do that, and if FedEx and/or UPS stopped selling overnight services, the practice of hand-carrying would resume.

The bus companies in the south discovered to their chagrin that the black people didn't HAVE to ride their busses. During the bus boycott in 60's, blacks didn't ride any busses for an entire year. They walked, bicycled, and organized jitneys (private automobiles used for pay carriage; similar to taxis).

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