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The Market Against Race and Sex Discrimination

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Libertarians with conservative backgrounds might grumble at this news: Responding to reports that diversity at big law firms is on the decline, a group of big corporations such as American Airlines, DuPont, and General Mills has just agreed to spend $30 million to hire minority- and women-owned law firms as outside counsel.

At first glance, this might seem like out-of-control political correctness or unseemly race consciousness. Why shouldn’t they just hire the best counsel, without regard to race or sex?

But as this National Law Journal article points out (free registration required), businesses aren’t doing this out of altruism or even just for the PR value. They’re doing it because the smaller minority- and female-run firms can do the work more efficiently, for less money than big white-male-dominated firms, which matters a lot in a tough economy.

This is exactly what free-market economists would predict. If minorities and women are insufficiently valued by some employers, they’ll go compete with those employers and win.

And if that holds true in the legal field, where personal characteristics and relationships matter far more than usual, that should make us all the more confident that it works most everywhere else, too — and that anti-discrimination laws aren’t as necessary as we’ve been led to believe.

Incidentally, Jeffrey Tucker has nicely summarized some of the problems caused by employment-discrimination laws in this review of Richard Epstein’s important book on the subject, Forbidden Grounds.

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