Why is there a need to prevent a racist, sexist, or otherwise bigoted vendor from discriminating who they sell to?

Question

Background

The issue of discriminating who you sell to in the United States seems to be premised on the fact that businesses are public accomodations according to this article:

Whether you post a sign or not, businesses never have the right to refuse or turn away customers because of their race, gender, age, nationality or religion. In addition to the Civil Rights Act of 1964, several states have their own civil rights legislation designed to prevent discrimination. The Americans with Disabilities Act also prohibits discrimination in public accommodations, making it illegal to refuse service to individuals who are disabled or handicapped.

Given that a Mixed Economy with a preference toward a free market is the economic system of the United States, from a free market point of view, this seems unnecessary to do. There will always be businesses and choice in the market. Businesses that discriminate will put themselves at a competitive disadvantage due to alienating a certain employer base at an extra cost to the business:

Businesses that discriminate based on a host of job-irrelevant characteristics, including race, ethnicity, gender, age, disability, and sexual orientation and gender identity put themselves at a competitive disadvantage compared to businesses that evaluate individuals based solely on their qualifications and capacity to contribute.

According to this Free Market point of view, using government enforcement seems to create a control where there does not need to be one.

Question

Why does the government need to institute a legal policy to prevent selling discrimination?

Answer 1

TL;DR: You question rests in the supposition that, next to the business that refuses to sell to me, there will be another similar business that will be willing to sell to me. That supposition is, to put it mildly, optimistic, and you ignore historical examples of institutionalized/collective racism that disprove it.

You take the POV of an individual discriminatory business owner in an overall non-discriminatory environment without taking into account other competence limiting factors.

But maybe I live at a small town that is served by two pharmacies, and -since racism is often a social convention- both pharmacy owners forbid me from buying medicines. Maybe I have no car or other transport means¹ to use it to access another town with pharmacies easily enough (in the case that those pharmacies are not owned by racists, too). And of course, being it an small town and my race being a minority², the market would not be big enough to support a third pharmacy³ to compete with the already established ones.

¹Or, we go back in time enough, simply there were no cars or other ways of transportation enough that would make travelling to the big city an easy activity.

²And probably not a rich minority.

³And that ignores possible barriers put forward by a racist mayor/council/public... again, do not think only of individual racism but of a racist community. If my race is 5% of the population and none of the remaining 95% will shop at a pharmacy that sells to me, it would be very difficult for such pharmacy to be profitable.

Answer 2

Other people already pointed out how restrictions in supply of goods will damage the targeted groups no matter what, but in addition to that, the supposition that discrimination is harmful to the supplier is also not necessarily correct.

In a society that is highly discriminatory to certain minorities, a business that bans those minorities might gain much more patronage by the bigoted majority than they would gain from accepting the patronage of that minority.

For example, I'm sure that during Jim Crow businesses that served blacks didn't ban whites, that certainly didn't result in them out competing white only businesses to dominate the market though, bigoted whites self segregated and discriminatory businesses managed to thrive.

Answer 3

Simply, because discrimination does not necessarily cause companies to go out of business.

Other answers have dealt with the problem of preventing concrete harm to customers who are being broadly discriminated against, which would remain a plausible justification for such laws even if any such business would inevitably fail, since new discriminatory businesses might continue popping up, and have also pointed out how in certain circumstances discrimination may be economically beneficial. However, another point is that even economically harmful discrimination will not necessarily force a business out of the market!

Discrimination is indeed often a poor business decision. It represents forgoing potential income, and most economic analyses suggest that a discriminatory business will be less successful than a non-discriminatory one. However, being less profitable only will lead to failure in a situation of perfect competition, where no differentiation between products is possible. In this case, the non-discriminatory business will spend less money on the same quality on labor, while also having more positive publicity and being able to take advantage of economies of scale. In an ideal situation, this would drive the discriminatory company out of business. And it is probably true that, in the modern United States, less-discriminatory businesses will be more successful.

The thing is, effectively, discriminatory businesses are not only taking on additional costs to meet the prejudice of their owners or managers, but also offering a differentiated product. Let's consider a much less harmful form of discrimination: exclusive clubs. Groups like Mensa charge money to belong to their organizations based on characteristics like scores on IQ tests. They offer some small benefits, yet they aren't outcompeted by a group that offers those same benefits to the general public. Why? Because the exclusivity is part of what they're selling. A group that offered a T-shirt with their name on it or access to their clubhouse to the entire population wouldn't be Mensa. No group offering the same services regardless of IQ scores can price Mensa out of the market, because they're not selling the same thing.

As a more direct example, a golf club that charges a significant membership fee and won't accept Jews or black people, or a neighborhood that limits homeowners to a certain religion (and yes, both these still exist) are selling an environment in which people can be surrounded by others who look and think like them. In a similar fashion, discriminatory businesses are actually effectively selling their exclusivity along with their physical products. A bakery that won't sell cakes to gay customers may well be responding to the owner's beliefs, but from the perspective of the market they're also selling a place where customers don't need to worry about seeing two people of the same sex holding hands. This is compounded by there being correlations between different things that a company can sell: for instance, Chik-Fil-A isn't just selling an environment hospitable to people who oppose same-sex marriage and inhospitable to LBGTQ people, but rather a conservative Christian environment generally, this last one more explicitly.

Answer 4

The government has a responsibility to all of its citizens to ensure their rights and liberties are not infringed upon.

It doesn't matter if a business would, theoretically, flourish, fail, or be unaffected by discrimination, the act of discrimination, itself, is something that a government has an active interest in dealing with on a more immediate basis.

And, to the point, a business absolutely IS a public accommodation, and only has the right to exist and operate within the bounds and definitions created the local, state and US laws.

Answer 5

According to this Free Market point of view, using government enforcement seems to create a control where there does not need to be one.

The federal government action was to counter-act the state government action of having police enforce southern apartheid, and courts refuse to punish the extra-judicial violence that supported it.

Answer 6

If let's say your local supermarket had a sign "***** not welcome", you are just looking at the "free market" problem.

You are ignoring the real problem: That ***** cannot buy their food and what else they need from that supermarket, forcing them to walk or drive further to do their shopping, possibly paying higher prices, possibly splitting up families (where for example dad is **** but mom is not).

The government should and likely will have laws to prevent people from being hurt by discrimination.

Answer 7

Lets take an example.

A minority family is traveling across the country. They start to run out of gas near a small town. Neither of the gas stations in town will sell them gas. The local hotel wont service them. They are forced to sleep in their car. In the night, the family is dragged out of the car and lynched by a group of drunken racists. Everyone in town knows that this is likely to happen. Everyone lets it happen.

Who murdered them?

The problem with discrimination isnt one random business owner. The free market is only "anti-racism" if everyone other than that business owner is "anti-racism". The free market does not have ethics. It is simply a conduit for the impulses of humanity. Slavery is acceptable to the free market. It is only illegal because we have collectively chosen to put a restriction on the free market.

If even a sizable minority of people are in favor of discrimination, the free market does not punish discrimination. People are not spread evenly across the country. On average, they are distributed in geographic clumps of similar individuals with similar views.

Discrimination is a systemic issue. The free market didnt force southerners to let black kids go to school. That required federal troops to be deployed as an armed escort.

Answer 8

I believe the answer is a lot simpler than the assumptions. Laws are created by persons that are sensitive to how the majority of people feel about things. This might be supported by economic theory or by ideology -- but not necessarily. So in this case, I believe the lawmakers simply did what they thought was good, not really caring about reasoning and theory.

Answer 9

I agree with the answers that emphasize the relatively low risk of market failures if discrimination is taking place in a supportive locally racist community.

However, it's also instructive to look at it from the overall POV of a free market/capitalistic economy and the somewhat implicit assumption in the question that businesses are usually free to operate as they wish. Thus the imposition on non-discrimination clauses can be framed as exceptional, intrusive, restrictions.

That is most assuredly not so. Businesses operate under business licenses, granted by either local or higher level government. There is a already a covenant between the authorities between business owners as to the conditions under which they operate:

• business permits
• regulation on labor, ranging from necessary (doctors, architects) to frivolous (hairdressers)
• zoning restrictions
• paid for licenses (my pet bugbears are the $500K+ licenses for taxis in big cities)
• provisions for access to handicapped people.
• etc...

Very few people expect businesses to operate totally unregulated so the principle of government oversight is well-established.

Let's take a closer look at handicap access regulations.

Any given business would save substantial money not having to provide wheelchair access ramps or special bathroom accommodations. As in the racial discrimination case, its risk of going out of business would be low, unless it got caught up in some form of social media outrage.

Yet, government mandates on businesses providing handicap access is not generally much disputed.

Part of that is positive human empathy towards others. Another part is that we all realize that perhaps, due to bad luck, it is us who could be in a wheelchair some day.

But there is another, utilitarian, dimension to it too: if handicapped people are largely confined home they will have an even harder time finding jobs, will require more state support and pay less taxes. So there is an economic incentive for the society as a whole to push laws protecting their rights.

Likewise, it is to a society's best interest that members of minorities can blossom to the best of their abilities, be happy, hold good jobs and pay taxes.

A society which allowed individual business owners to discriminate in the public sphere (rather than "just" in their private dealings) would cause serious harm to both the well-being of those minorities and their economic output. Coordinated at a local level, sustained denial of service from vital businesses (ex: gas stations, grocery stores) could drive out citizens from whole swathes of their own country.

Unlike the handicap access however, the actual cost of compliances to businesses is nil and perhaps even negative if one takes into account foregone business activity.

Answer 10

The answer is that the conclusion is wrong because one major assumption is wrong.

"Businesses that discriminate will put themselves at a competitive disadvantage"

is not only not always true, it completely ignores that certain customers may decide to avoid a business that does not discriminate, because they'd rather not encounter green people while shopping. Thus there are situations where we must assume

"Businesses that DON'T discriminate will put themselves at a competitive disadvantage"

Now let's consider that competitive advantages aren't simply about more or less profit, they are about a business being viable or not. If there are places where businesses that serve green people are not viable, there will be significantly fewer businesses that serve green people there, significantly fewer green people will live there, which leads to businesses serving green people being even less viable in these places. Which leads to even fewee green people living there. Which ultimately leads to segregation.

So government needs to prevent selling discrimination if government wants to avoid segregation.

Answer 11

There is no economic or social need or motivation for these types of laws, it is purely a need on the political "market". The politicians think they will gain voters by introducing this kind of legislation. Basic public choice.

Answer 12

Because a store that serves all is more useful to society.

Having a mixed economy is accepting as fact that a totally free economy likely would deteriorate into cartels and monopolies. Thus, regulation - to ensure equal access to markets for both vendors and buyers. You apply the regulation in the interests of the common, and that is usually where unreasonable discrimination is caught by the web of law. Unreasonable being against common interest. Against common interest would be discrimination for no other reason than preference. Examples of discrimination that would be according to common interest are for instance against vendors who sell dangerous products. Un-earthed appliances labeled safe to use in a pool or maybe hand grenades. Or discriminate on age, common interest dictates that 6-year olds shouldn't buy guns and alcohol.