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Racism at Microsoft?

Mises Daily: Monday, January 08, 2001 by

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Windows LogoMicrosoft, one of the great success stories in the history of American enterprise, has spent hundreds of millions to defend itself against claim that it is violating anti-trust law. That’s the price you pay for growing big through market success in the land of free enterprise. But just as that absurd suit is burning itself out, particularly with the change of regimes in Washington, the enemies of Microsoft have launched another sneak attack. 

Failing to destroy the company on antitrust grounds, Microsoft now stands accused of being racially discriminatory in its hiring and job promotion. A $5 billion class-action suit has been filed by former and present employees claiming that they have been damaged by an institutionalized racial bias (a "plantation mentality") at Microsoft. The amount demanded, by the way, falls just short of the annual GDP of Bolivia. 

And who has been assigned to adjudicate the case? Thomas Penfield Jackson--the same judge who couldn’t use a computer at the outset of the antitrust case but later divined that the company should be split into two parts. The timing and supposed coincidence of the chosen judge suggests that this, like many such racial attacks, is being driven by politics.

It’s no secret that blacks are under-represented in high-tech firms, a fact which reflects labor-market demographic realities. One black the company did promote to a high level, Peter Browne, became a millionaire and then paid the company back by suing the daylights out of them. 

The newest suit claims that executives said things to black employees like: "listen, you [N-word], you’ll never get out of this cubicle." But are we really expected to believe this? Anyone who knows anything about the culture of the technology business knows that the claim of invidious discrimination is absurd. This is an industry where traditional indicators like social status, dress, education, national origin, and race, mean nothing. Performance is everything. You are hired, promoted, and paid according to your ability. 

At Microsoft, for example, its internal servers offer employee newsgroups for:

  • Arabs in Microsoft    
  • Chinese Employees in MS Comm     
  • Christians at Microsoft     
  • Filipino Employees at Corporate     
  • Gay, Lesbian, Bisexual, and Transgender Issues     
  • Greek Computing & News     
  • Hungarians at Microsofto Indians at Microsoft     
  • Jews at Microsoft     
  • Muslims at Microsoft     
  • Nigerians at Microsoft     
  • North American Natives at Microsoft     
  • Poles at Microsoft o Romanians at Microsoft     
  • Single Parents @ Microsoft     
  • Turkish Speaking People at Microsoft     
  • Women's Issues     
  • Libertarian Communists at Microsoft 

You can’t get much more diverse than that. But a non-discriminatory policy doesn’t necessarily lead to egalitarian results, in the software industry or anywhere else. We don’t expect the NBA to reflect a racial cross-section of America, and we don’t expect child-care workers to reflect a sexual balance. Nor should they. In a competitive market economy, diversity is found not at every level of commerce, but in the overall economic structure, where some groups are over-represented in some professions and firms, and under-represented in others. That’s the way freedom works.

But the socialists and central planners don’t see it that way. They want government officials, courts, and lawyers to be in charge of importing political struggles into the job market under the cover of egalitarianism. In the 1990s, the Justice Department and the EEOC have been very sympathetic to this idea, mainly because it rewards constituents who support the political party in power. The workplace has become another front in an ongoing political war.

The lawyer pushing the case against Microsoft is Willie Gary of Florida, a shakedown artist with a history. He took Coca-Cola and Disney for hundreds of millions—suits that were settled privately. The trick is to find a rich company, a handful of disgruntled employees, and count on the fact that most companies would rather pay the ransom money than fight it out in the courtroom. 

The grounds on which Gary sues is Title VII of the 1964 Civil Rights Act, but the precise tools are a series of amendments that came late in the first Bush administration. Not only is this sort of extortion legal; it appears to be legally mandated by the standards of proof now required in federal law. If you can find a few folks willing to sign up, just about any amount of civil-rights extortion is feasible.

In a free market, such complaints wouldn’t go anywhere, since employee-employer relations would be governed entirely by contract. And even in the present system, the plaintiffs themselves don’t benefit nearly as much as the lawyers. The arrangement is extremely costly to business, not only in the judgements they pay but in the absurd quota systems they end up instituting to protect themselves against lawsuits (which, in the end, don’t provide much protection at all).

But let’s say the attack on Microsoft is not just another racial shakedown racket. What do we have to believe the company has done to make this suit plausible? In an extremely tight job market, in which programmers and software engineers can almost name their price, where every firm competes fiercely for employees, and a slight competitive disadvantage can mean losing huge amounts, we are asked to believe that Microsoft thought the following of its black applicants and employees:

"You guys have impressive skills, which even surpass those of our present employees and managers. We know that your skills would help give us a competitive advantage. You might be just the key we need to fixing up and marketing our new software, or otherwise better managing our vast workforce. Our stock price might soar! 

"We could even afford to make the highest bid to ensure that we enjoy the benefit of your skills and our competitors do not. But, too bad for you, you are black and, for completely irrational reasons, we just don’t like blacks (though we give hundreds of millions in charitable dollars to black schools and communities). Hence, we are going to forego the use of your talents to our own benefit. And we are going to do so despite the lawsuits and public-relations disaster that will come our way if this fact is revealed."

Does anyone believe the Microsoft management thinks this way? If it systematically put some racial ideology ahead of profits, it wouldn’t be the success that it is today. Now, let me be clear: if Microsoft irrationally discriminated, it might be stupid, but in a free society, it should not be illegal. No business should be compelled to hire anyone for any reason, and no employee should be compelled to work for any particular company. Each party can refuse to do business on any grounds he chooses. 

This ensures that all labor exchanges are performed on a mutually beneficial basis. That is the key to insuring peace in the relationship between laborers and capitalists. There is no such thing as a "plantation mentality" in free enterprise because the employees are not slaves. They are free to come, while playing present and prospective employers against each other on a competitive basis. 

But what if an employer behaves like a meany and stiff-arms people because of their race or sex? There are other employers glad to hire competent employees bypassed by invidious discriminators. Indeed, they have a financial incentive to do so. One thing I’ve never understood: why would anyone want to work for a company that doesn’t want him? 

There are no economic grounds for anti-discrimination law. And so long as it hangs around on the statutes, it will be used as a weapon by scam artists to loot businesses and to impose the peculiar American form of socialism, one based not on class and income but race and sex. P.S. Gary Willies himself find Microsoft’s products so valuable that he recommends users of his website download the Internet Explorer. For free of course. 

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Llewellyn H. Rockwell, Jr., (rockwell@mises.org) is president of the Ludwig von Mises Institute and editor of LewRockwell.com. See also Rockwell's Archive and  Mises.org on Microsoft.