Monday, January 17, 2011

MLK Day: The Economic Benefits of Eliminating Discrimination

"I have a dream 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."- Martin Luther King Jr.

As most of you know, today is the day when we commemorate the work of the great Martin Luther King Jr.  Dr. King was a visionary who pictured a world where people would be judged on their abilities, rather than the pigmentation of their skin.  Today this seems like an obvious concept, but in Dr. King's world, it wasn't quite so obvious.  It took men and women like Dr. King to bring the cost of discrimination into the public consciousness.  I think we can all agree that there is certainly a moral component to eliminating discrimation.  It is right for people to be judged on their merits.  However, what baffles me is that discrimination lasted for so long despite the fact that it goes against our own self-interest.  People who discriminate are only taking money out of their own wallets and pockebooks.  It is in a person's or company's best economic interest to be color blind.

Let's take the fictitious example of two companies:  Company A and Company B.  Both companies are in the business of making and selling widgets.  The only difference between the two companies is that Company A will only hire people whose first names start with a vowel.  People who's names start with consonants need not apply for any job opening at Company A.  In contrast, Company B will hire all comers.  Their mottos is, "It doesn't matter if you are an Andrew or a Steve; you are welcome to apply at Company B."

Which company is going to have the best employees?  Company B of course.  The consonant bigotry of its owners mean that even if Steve is more qualified than Andrew, Andrew is going to get the job at Company A.  Rather than hiring the best for the job, Company A must "settle" for second, third, and fourth best because they are hiring based upon a criteria which has nothing to do with job performance.  It would be one thing if people with vowel names were better at making widgets.  However, there is nothing to correlate widget-making with the fact that your parents happened to like the name Andrew.  Company B is going to make better widgets than Company A, and that is going to cost Company A real money.

If you think that this is a contrived example, consider the Washington Redskins football club.  From the initial inception, blacks were allowed to compete on professional football teams.  However black players eventually were purged from teams, and by 1933 there were none left on any teams' roster.  Many people attribute the elimination of blacks from the league to the owner of the Washington Redskins, George Preston Marshall.  Marshall was known to be one of the leagues biggest racists.  When the NFL finally began to re-integrate in 1946, Marshall refused to sign any black players. 

Marshall steadfastly refused to sign any black players despite the fact that his fellow owners all did.  By limiting himself to white players only, he was making his team less competitve than their rivals.  From 1946 until the time they finally signed two black players in 1962 (under pressure from the U.S. Government) they were not very good:  zero playoff appearances and only three winning seasons.  In their final season before integration, they went 1-12-1.  It is clear that Marshall's policy of not signing black players doomed his franchise to years of irrelevance. 

As a footnote, Bobby Mitchell, one of the first two black players the Redskins signed in 1962, went on to have a Hall of Fame career.  Maybe Marshall's franchise would have had a more successful run if he had put aside his bigotry in favor of his own economic self-interest.  I guess it goes to show how irrational, and frankly, how stupid bigots are.

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