Capitalism, Discrimination, and Affirmative Action, oh my!

Although he would grit his teeth, dig his feet into the ground, and ultimately hate it, Milton Friedman would have to agree that, based on his logic, Affirmative action laws are justified.  In the chapter entitled ‘Capitalism and Discrimination,’ in his book Capitalism and Freedom, Friedman makes the argument that Fair employment practices in legislation, right to work laws, and mandatory desegregation in schools actually interfere with a free market that, if left to its own devices, allows for decreased discrimination over time. To explain this, Friedman uses an example of a grocery store owner being forced by law to hire a black man to work as one of his store clerks instead of a white man. This grocery store is in a community of people who are opposed to being waited on by a black clerk. The community’s aversion to black clerks could hurt the grocery store owner’s business, or even lead to the store being shut down. By hiring a white clerk in this community, the grocery store owner is simply “producing the services for the consumers that the consumers are willing to pay for” (112). Friedman continues, claiming that the grocery store owner is not harming the black clerk because the type of harm suffered by the black clerk is negative harm, and thus justifiable because it occurs when two individuals are unable to find mutually acceptable contracts. Friedman gives the example of  “a community at large has a preference for blues singers rather than opera singers.” The community is increasing the economic well being of the blues singer relative to the opera singer (113).

Now let’s look at the Affirmative action we see in today’s society. To do this, I will specifically apply Friedman’s argument to one of the more recent Supreme Court cases concerning affirmative action that was decided in 2003. In Grutter v. Bollinger, the Supreme Court upheld the University of Michigan Law School’s affirmative action admission policy. Grutter claimed that the Law School was using race as a predominant factor, giving applicants belonging to certain minority groups a significantly greater chance of admission than students with similar credentials from disfavored racial groups; and that respondents had no compelling interest to justify that use of race.

However, Friedman’s logic in ‘Capitalism and Discrimination’ chapter give the University of Michigan Law School a very compelling reason, and justify its actions. The University of Michigan Law School is similar an employer choosing which employee to hire. Like the employer hiring the white clerk instead of black clerk in Friedman’s example, the Law School needs to admit students who will make it the most profit; using race as a factor in considering whether or not to admit a student helps the School create diversity, a characteristic that is becoming a more and more important selling factor when colleges advertise to the community of students and alumni that ‘consume’ its goods through tuition and donations. Essentially, allowing Affirmative action in the University admissions process allows Universities to meet the demands of the community that gives them profit.  Moreover, just as community members can decide to buy from a different grocery store that does not hire black clerks as stated in the above example, students can simply apply to a law school that does not factor race into their admissions process. This is likewise similar to Freidman’s proposed voucher system in the sense that if enough students decide to apply to other Law Schools instead of University of Michigan because of their affirmative action policy, the University of Michigan will change their admission evaluation process. This system, as it stands, works as the market does by permitting cooperation (not interfering with the contracts individuals are entering into) without conformity.

This justification of Affirmative action is likewise supported by a study conducted in the 1990's by Harry J. Holzer, a professor of public policy at Georgetown University, and David B. Neumark, a professor of economics at Michigan State on the economic impact of Affirmative action policies. Their research showed that affirmative action might actually help fine-tune the labor market (in our case the market for students as well) because it increases the use of recruitment and screening procedures for job applicants. In a working paper released by the professors in1999, they concluded that ''the empirical case against affirmative action on the grounds of efficiency is weak at best.'' The study also noted that while unfavored majority races might have missed opportunities to work or learn as a result of affirmative action, this occurred because colleges and companies have begun to value the potential of minorities and women more accurately, meaning economic efficiency is attained.