Color schemes: can affirmative action be reconciled with liberal individualism? (Culture and Reviews).

The Anatomy of Racial Inequality, by Glenn C. Loury, Cambridge, Mass.: Harvard University Press, 226 pages, $22.95

GLENN LOURY is an intelligent but angry man with a mission: to explain both the origins and the persistence of racial inequality in the United States. Loury, a professor of economics at Boston University, was once that rarest of beings, a black conservative intellectual, with a strong belief in self-reliance and a deep suspicion of affirmative action. In recent years his ideology has changed. His migration to the left has been marked by brushes with the law, attacked as "disingenuous" by Norman Podhoretz in Commentary, and chronicled in bemused detail by Adam Shatz in The New York Times Magazine.

Although The Anatomy of Racial Inequality sheds some light on his conspicuous change of heart, Loury, to his credit, does not dwell on his personal odyssey. He is much more intent on laying out his argument that the "analytic and the philosophical resources of liberal individualism" fail in addressing the situation of black Americans. "Succinctly stated," he writes, "my problem with liberal individualism is that it fails to comprehend how stigmainfluenced dynamics in the spheres of social interaction and self-image production can induce objective racial inequality, decoupled from contemporaneous discriminatory acts of individuals, carrying across generations, shaping political and social-cognitive sensibilities in the citizenry, making racial disparity appear natural and nondissonant, stymieing reform and locking in inequality."

Having concluded that the appeal to color blindness is a dangerous distraction from the lingering effects of prejudice; Loury calls for major structural remedies to speed up progress toward racial equality. Most prominently, he adamantly and impatiently defends the affirmative action programs widely used in American higher education. He sees affirmative action as a means of propelling blacks into positions of influence, thereby changing social attitudes ingrained by many years of private and institutionalized bigotry. "What is required," he says, "is a commitment on the part of the public, the political elite, the opinion-shaping media, and so on to take responsibility for such situations as the contemporary plight of the urban black poor, and to understand them in a general way as a consequence of an ethically indefensible past." While there is some merit to Loury's observations about the inadequacy of color blindness, his explanation of racial inequality is only partly successful, and his critique of libera l individualism misses the mark.

Loury finds the persistence of race-based social differences something of a mystery because in his view race is only a "marker" that is easy to observe and difficult to alter. In and of itself a racial marker contains no reliable information about important biological differences between individuals because, quite simply, there are none. Such markers are, however, frequently invested with a "social meaning," whereby individuals both within and outside the racial group attribute certain characteristics to its members. When individuals act based on these social meanings, they construct feedback loops that appear to validate the false assumption of natural differences that people tacitly accept in their everyday lives. When these global impressions recycle, they create a longstanding racial stigma that becomes nearly impossible to shake, even over the course of generations.

One of Loury's instructive examples of "self-confirming racial stereo-types" involves a group of employers who start out with the belief that blacks are less likely to work hard than their white peers. These employers are quicker to fire blacks, because they believe they need less evidence to confirm their original low estimation. Black workers in turn understand that they are under harsh scrutiny and thus invest less energy in doing a job they think they are unlikely to keep. The upshot, according to Loury, is that they exhibit a higher rate of failure, which appears to confirm the false initial assumption about their lesser capacities.

A similar feedback loop operates at night on the streets of any major city. Let cab drivers think that young black males are more likely to commit crimes than white ones, and these drivers (of both races) will gravitate to white customers. Honest black males therefore will exit this market, so that the black fares that remain will be in fact more dangerous than the white fares, even when the two overall populations are equally law-abiding.

In these and similar cases, Loury's critical insight is that mistakes in perception lead to mistakes in judgment that reinforce the initial social stigma. Because each actor occupies a small competitive niche, it does not pay him to correct his errors. He can do little to alter the larger, entrenched patterns of social behavior, and he has no incentive to do so, given that his filtered observations are consistent with his assumptions.

In Loury's view, the upshot is clear. Although slavery has been banished since 1865 and the last vestiges of Jim Crow were eliminated more than three decades ago, racial inequality persists. Even without contemporary prejudice, Loury claims, pernicious feedback loops continue their work "indefinitely" unless and until some conscious and determined effort is made to break them. Loury rejects the pious claims of liberals who think market economics or Kantian theorizing, with its emphasis on the universal self-realization of autonomous individuals, can make a dent in these powerful but hidden mechanisms. Attacking such thinking for its "sociological naivete," he concludes, "I cannot abide the imposition of abstract strictures of neutrality upon a game in which systematically nonneutral practices [i.e., past discrimination] have left so many raced and stigmatized outsiders with so few good cards to play." He insists that the rules need to be changed, at least for the time being.

Loury's account is ingenious, but he goes astray at several points. As a contemporary of Loury, it seems clear to me that he greatly understates the level of racial progress in the United States during our lifetimes. Loury berates the historians Abigail and Stephan Thernstrom for their belief that affirmative action programs in the United States only reinforce the racial differences that wise social policy should seek to eliminate. But he does little to counteract their impressive compilation of data indicating major shifts in racial attitudes and behavior during the last 50 years. The level of social integration across races is greater than it has ever been, and socioeconomic differences have shrunk dramatically. In 1960, the Thernstroms note, 38 percent of black adults were high school graduates, compared to 64 percent of white adults. By 1995 the gap had virtually disappeared: 87 percent of blacks had graduated high school, compared to 88 percent of whites. The Thernstroms report that in 1940 the median bl ack income was 41 percent of the median white income among men and 36 percent among women; by 1995 those ratios had changed to 67 percent for men and 89 percent for women.

To be sure, the economic progress of many blacks has been slower than one would have liked, but feedback loops probably have had little to do with this. I doubt that large institutional employers are ever trapped in the sort of feedback loop Loury describes, given the extensive management systems they use to measure and correct racial discrimination. And if these loops were as powerful and pervasive as Loury suggests, it's hard to see how the dramatic changes of the last half-century could have occurred.

Where else to look? Putting aside the woeful state of public education for inner-city students, much of the difficulty in labor markets could be due to regulations that hurt the people they're designed to help. I speak here of one curious omission from Loury's field of vision: the basic prohibition, in Title VII of the 1964 Civil Rights Act, against discrimination based on race in the terms and conditions of employment. This sort of legislation has ambiguous economic consequences: Blacks who find jobs will receive some protection against dismissal, but at the same time that protection will make employers, fearing litigation, more reluctant to hire black workers in the first place. One would therefore expect that once Title VII swept away the explicit racial classifications common in the United States before 1964, progress through employment discrimination laws would be slower than many hoped, which has been the case since 1975 or so. Rather than an overall improvement m black wage levels, the result of Title VII would be a higher variation in the income of black workers, with the rich getting richer and the poor getting poorer, which seems to be part of the trend.

Loury not only misses the unintended consequences of the 1964 Civil Rights Act; he fails to note that the statute epitomizes the color blindness he deplores for its obliviousness to real social differences. The justification offered by Hubert Humphrey and the law's other leading defenders was that it would prevent employers from being distracted by racial prejudice. Instead they would hire workers based on a pure, disembodied conception of individual merit -the sort of standard that Loury attacks with great vigor and some success.

Columbia University law professor Michael Sovern's 1966 defense of the law, Legal Restraints on Racial Discrimination in Employment, stated explicitly that employers were free to make head-to-head comparisons between black and white applicants, disregarding the social and historical handicaps that blacks bring to the hiring hail. The law's supporters believed that eliminating formal discrimination in labor markets would bring about approximate employment equality as the social effects of prior discrimination dissipated with time.

Loury likewise overlooks the fact that the 1964 Civil Rights Act actually slowed down private adoption of the affirmative action programs he defends. Title VII made it unlawful to discriminate against "any individual" on the ground of race, and it took nearly a decade and a half for the Supreme Court to perform the legal legerdemain necessary to reconcile racial preferences for blacks with this clear prohibition against affirmative action.

Loury's confusion about the law leads to a second, more philosophical mistake: He fails to appreciate how liberal individualism bolsters the case for allowing (but never mandating) affirmative action. Liberalism, of course, relies on the color-blind principle to guarantee the equality of all individuals under the law. In 1896 Justice John M. Harlan, dissenting from the Supreme Court's tragic decision in Plessy v. Ferguson, invoked that principle to attack state-sponsored segregation. Harlan believed in freedom of association and opposed govermnent-created castes. No doubt many whites in his time would have exercised their contractual liberties to discriminate against blacks, but many others would have worked to advance the cause Loury so fervently supports. Such individuals were often thwarted by segregationist legislation.

Nothing in the principles of classical liberalism requires individuals to pursue only their narrow atomistic interests, blind to the broader social context. The prohibition against force and fraud at the heart of a liberal order is designed to curb the dangerous appetites of the most selfish. By stressing an imperfect obligation of benevolence, classical liberalism enlists associational freedom to promote charity, good deeds, and socially responsive behavior by people with more-generous impulses. Captains of industry from John D. Rockefeller to Bill Gates got Loury's point about social context long before he made it, in both their business and charitable activities. Private affirmative action is fully consistent with the psychological underpinnings and normative requirements of liberal individualism.

It therefore should come as no surprise that the voluntary efforts of universities, corporations, and foundations put affirmative action on the map. These programs went far beyond the color-blind commands of the civil rights laws. In their 1998 book The Shape of the River, William Bowen and Derek Bok argue that such efforts did by and large achieve their goal of bringing capable black students into the social mainstream. (See "Unexplored Tributaries," February 1999, for my rejoinder.) One need not accept that argument, which has a shaky empirical foundation, to believe that private institutions should be free to do as they please in this area, within the context of their own purposes and budgets. Universities are in the business of organizing cross-subsidies. Their separate and decentralized activities will not be narrowly atomistic. Freed of external political pressures, they are far more likely to produce sensible social outcomes than any ham-handed state mandate on affirmative action.

Today's key battle is not over the robust affirmative action programs found in private universities. Rather, it relates to affirmative action in public universities, which opponents claim is barred by the Constitution's guarantee that all citizens will receive "the equal protection of the laws." In the 1995 case Adarand Contractors v. Pena, the Supreme Court stated unequivocally that equal protection requires courts to find a compelling state interest for any state or local program that discriminates on the ground of race.

Loury rightly finds it infuriating that the same uncompromising standard should apply to actions designed to rectify past wrongs as to those that perpetuate them. He is quite happy to accept race-blind policies that advance the welfare of blacks and improve the overall social situation. But he has no patience with race-blind policies supported by people who are indifferent to their racial consequences.

Whether the issue is the location of a public facility, the election of public officials, or the choice of a school curriculum, Loury concludes, "To insist on indifference to race when approaching these questions is to evidence both political stupidity and a willful disregard of the concerns of social justice."

Again, however, he muddies the waters by failing to lay this unfortunate race-blind dogmatism at the doorstep of the 1964 Civil Rights Act. Instead Loury spurns the classical individualism that offers the best chance to defeat a conservative judiciary bent on dismantling every public affirmative action program in the United States.

Equal protection does mandate that the duties of the night watchman state be discharged in a color-blind fashion. But the same strict standard need not apply when the state assumes the very different function of supplying goods and services to its citizens. In this role it acts in competition with private universities, which under liberal principles should be free to adopt affirmative action programs. The fact that these programs, both public and private, have been so widely adopted (even to excess) in the face of such strong opposition testifies that, in sharp contrast to Jim Crow, they are not the product of a corrupt or factional political system.

Rather, they are an outgrowth of a multidimensional deliberative process that has converged on the same outcome time after time. That virtually every major private corporation and private university embraces some form of affirmative action suggests that state institutions doing the same tasks should be allowed the same latitude. A bar against any form of affirmative action is a tough position to defend inside any organization, public or private. The great danger here is legislative flat, such as California's Proposition 209, which forces all public universities to conform to Ward Connerly's monochromatic vision of human nature.

Loury should recognize that decentralized social institutions offer the greatest prospect for improving race relations. The Civil Rights Acts were important in securing the demise of Jim Crow, but those laws have long since outlived their usefulness in the regulation of private behavior in competitive markets. Now we need a return to freedom.

Richard A. Epstein ([e-mail]) is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago and the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution. He is also the author of Forbidden Grounds: The Case Against Employment Discrimination Laws (Harvard University Press).