Hans Bader, who comments here (always wisely) from time to time, is an attorney with the Competitive Enterprise Institute. He has a post on the CEI blog about the cost of racial preferences that is required reading.
He mentions, by way of example, the Domar Electric case,
in which Los Angeles accepted a bid for almost $4 million to complete a contract rather than the lowest bid of approximately $3.3 million, at a cost to taxpayers of more than $650,000. The lowest bidder was rejected solely because it failed to engage in affirmative action in subcontracting.
Proposition 209, Bader points out, barred this sort of racial favoritism.
A number of state affirmative-action programs have since been struck down under Prop. 209, saving taxpayers hundreds of millions of dollars.
Supporters of racial preferences often argue that are necessary because racism is so pervasively endemic in American society that ending preferences would result in “re-segregation,” or something like it. This argument has always struck me as odd (among other things) because the major power centers — big business, unions, the press, the universities — are such avid supporters of racial preference.
Indeed, because of the support of such interests for maintaing preferences, the supporters of the Michigan Civil Rights Initiative, which like Prop. 209 would ban them, will be heavily, dramatically outspent in Michigan. As Bader writtes,
In California, big business largely sat out the battle over Prop. 209, to avoid offending either moderate Republican Governor Pete Wilson, who strongly supported Prop. 209, or liberal legislators and interest groups, who opposed it.
In Michigan, by contrast, few politicians openly support the MCRI, for fear of denunciation in the press, and the state’s Governor, Jennifer Granholm (D), is an avid defender of race preferences who is vociferously opposed to the MCRI.
Big business in turn is seeking to curry favor with Governor Granholm, who pushed through a $2 billion corporate welfare scheme to dole out taxpayer money to favored businesses, even while vetoing $1 billion in business tax cuts available to all businesses, big and small.
Here’s a thought, and a market-oriented one at that (blame this on me, however, not Bader or CEI). Since the argument that racial preferences are wrong, immoral, and in violation of the core American value that people should be treated “without regard” to race falls on so many deaf ears in major centers of the American economy and society, and since they impose such a high unlegislated expense on normal consumers and taxpayers, perhaps an alternative to MCRI/209-like bans on preferences would be a movement to make the devotees of preferences pay for the privilege of discriminating. These incentives could be in the form of a discrimination tax, with rates tracking the degree or number of preferences offered, or tax credits to those organizations that don’t discriminate.
This approach has been tried with some success in environmental regulation. It seems only fair to make those organizations that are determined to practice racial discrimination — a socially harmful and cost-imposing activity that is a form of moral and social pollution — pay for the privilege.