Economics of Discrimination | Sunday Observer

Economics of Discrimination

18 April, 2021

“No one is born hating another person because of the colour of his skin, or his background, or his religion. People must learn to hate, and if they can learn to hate, they can be taught to love, for love comes more naturally to the human heart than its opposite.” – Nelson Mandela

When one sees or hears the word “discrimination” the very first feeling one gets, almost always, is a negative one.

Most of us have heard, seen and/or read about horrific stories of discrimination against a person or a group of people throughout the human history.

Nelson Mandela’s fight against apartheid in South Africa and his success in becoming the first non-white president in that country is perhaps one story of such struggles most of us remember from the recent past.

Archbishop Desmond Tutu once said: “In my country of South Africa, we struggled for years against the evil system of apartheid that divided human beings, children of the same God, by racial classification and then denied many of them fundamental human rights.”

Discriminatory practices

South Africa was not the only country where similar or even worse types of discriminatory practices were found based on people’s race, colour of the skin, religion, gender and/or the cast.

During the trial of the white police officer of the Minneapolis, Minnesota police department, for allegedly killing the African-American George Floyd while being in his custody, another officer from the same police department was taken into custody last week for killing a twenty year old African-American during a routine traffic stop.

This officer has said that it was a mistake due to a mix-up she had with the Taser and the Gun.

Racial profiling has been and still is a common practice with the law enforcement authorities in many countries.

Malcom X, who was a fearless human rights activist in the USA during the 50s and 60s, once said: “They don’t stand for anything different in South Africa than what America stands for. The only difference is over there they preach as well as practice apartheid. America preaches freedom and practices slavery.”

Yet, it is the same country where the declaration of independence says that “We hold the truth to be self-evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are, life, liberty and the pursuit of happiness – That to secure these rights, Governments are instituted among men, deriving their just powers from the consent of the Governed...”

What do all these have to do with Sri Lanka or any other country for that matter? If the USA was not the economically most successful and/or not considered as the most successful democracy (at least on paper) in the world then, why things happen the way they do may not be that important to other countries.

But, it is the largest economy in the world and China’s GDP, in the second place, is still about US$ 7 trillion behind that of the US.

Important information

Therefore, how they became the largest economy in the world and what they do to maintain that lead and how they do it are all important information for all other countries.

While one can motivate oneself to do better by following the good practices of the others identifying and understanding the bad practices is equally important in avoiding such disasters in one’s own land.

Economies around the world are struggling at present due to the Covid-19 pandemic and Sri Lankan economy is not an exception.

In addition to, numbers and figures it may be helpful to look at the sociological factors affecting an economy of a country in general, ours in particular, within the efforts of rebuilding the economy.

Discrimination in the marketplace occurs when people with similar economic characteristics experience different economic outcomes because of their race, sex or other non-economic characteristics.

Nobel Prize winning economist Gary S. Becker’s pioneering work on the “economics of discrimination” suggested that such discrimination occurs because of people’s preferences or attitudes.

If enough people have prejudices against a certain group of people then the market will respond to those preferences. On the contrary, “discrimination is simply an act of choice.

Scarcity requires us to choose and therefore, scarcity is the cause of discrimination” says the economist Walter E. Williams, who happened to be an African-American himself.

Marketplace discrimination can be seen in all kinds of different ways such as: salespeople less willing to sell to one group than another or consumers less willing to buy from one group than another or workers of one race, sex, religion or ethnic group less willing to work with those of another race, sex or ethnic group. If a certain group of employees are discriminated against, irrespective of whether the discrimination comes from the employers, employees or the consumers, the impact on the group discriminated against will be the same.

They will find it difficult to be employed and even if they did, they will have to settle for lower wages than their counter parts due to the imbalance in the supply and demand in the labor market.

Support systems

At the same time, the leaders and the entrepreneurs in the discriminated group will start looking for ways to help their community and will find it easier to be segregated and build their own support systems with their own industries which will give preference to their own kind when hiring workers, will offer better salaries, have their own banking systems, housing complexes, schools and hospitals.

This will create a sub economy that can even be the envy of the discriminators who may not have seen the negative effects of losing a part of the labour force and even the consumer base.

It may be too late when they realise it, if at all they do come to that.

“United we stand divided we fall” is a quote that is used quite often to encourage collaboration, team work and patriotism. One of the important characteristics employers look for in their employees is their willingness and ability to be good team-players. Whether it is the family unit, a business organization, a particular industry or even a nation, the unity among the members of an entity certainly strengthens the energy of its existence and the efforts of achieving its goals.

Justice programs

While stricter enforcement of civil right laws and other social justice programs may help reducing labor-market discrimination some of the differences may be attributed to premarket conditions such as family environment and education.

The problem is that such premarket conditions may themselves be due to similar discriminatory practices.

Whatever the remedies a country would bring in, it will be a long-term process since these discriminatory practices have been in existence for generations and changing the thought patterns is an evolutionary process itself. It is interesting to note here that it was also a Harvard educated African-American historian, Carter G. Woodson, who, in early 1900s said: “In the long run, there is not much discrimination against superior talent”