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THE ECONOMICS OF DISCRIMINATION

The power of the free market was perhaps best demonstrated in whiteruled South Africa during the era of apartheid. Here we need not wonder about racial predispositions or about the fact that the vast majority of employers in industry, agriculture, and government were white. Yet, even in a country which became a worldwide symbol of racial oppression, white employers in competitive industries violated official government policy on a massive scale by hiring more black workers and in higher positions than the law allowed. There is no compelling evidence that these particular white employers had different racial predispositions than the white people who administered the apartheid government. What they had were very different costs of discrimination. While government agencies and government-regulated railroads, for example, could maintain apartheid policies at virtually zero cost to themselves, it was a wholly different economic situation for people spending their own money. Home-building was a typical example: To build a house in Johannesburg meant either waiting for months for a white, expensive, legal building gang, or finding a black gang, perhaps with a white nominally in charge in case an official came inquiring. Most customers opted for the quicker, cheaper service.6 Such practices became so widespread in South Africa that the white-run apartheid government cracked down in the 1970s, fining hundreds of building construction companies.7 Moreover, this was by no means the only industry that hired more blacks than they were allowed to by law. In the clothing industry, no blacks at all were allowed to work in certain categories of jobs, under the apartheid laws. Yet, as of 1970, blacks were an absolute majority of the workers in those job categories.8
There were also residential areas in South Africa set aside by law for whites only—and yet there were not only many non-whites living in these areas (including black American economist Walter Williams), at least one such area had an absolute majority of non-whites. Competition in a free market simply made discrimination too expensive for many, even though violating the apartheid laws also cost money.d

Sowell, Thomas (2011-10-04). The Thomas Sowell Reader (p. 94). Basic Books. Kindle Edition.

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