On the other hand, the folks who live in these projects have a pretty good sense as to whether or not the things asked of them cost them more than the things they get in exchange. And you find that 90 percent of the tenants in public housing are desperately in favor of these kinds of conditions. That pushes me to believe that, at least under guarded and limited circumstances, they can have this, especially if the government can show the level of peril that can be averted is substantial enough to get noticed.
I have a better solution. The true vice of public housing is that at the expiration of the lease, the government cannot expel disruptive tenants. The only way you can expel them is to have a trial that requires the neighbors to testify. No sane person will take the risk of retaliation. Instead, you get public housing projects in which a bad eviction policy means that the bad tenants drive out the good tenants and you have what you see in Chicago. You can stop the problem by the eviction policy without the search-and-seizure issue. The inability to come up with a solution unique to government, to think through the terms of a lease the government could offer and make stick, makes it clear how difficult it is for the government to be in charge of a business enterprise.
The first best solution to the problem of unconstitutional conditions and of difficult bargaining is always to try and restrict the government's sphere. Running housing projects is not a situation in which the government is providing a useful service.
Reason: Let's talk about another area in which you think the government is not providing a good example: civil rights. You've argued that blacks and other minorities have been hurt more than they've been helped. How is that?
Epstein: If you have a state which gets in the business of race relations, you have to look at the down side. That seems pretty clear in the case of Jim Crow legislation in the South. Jim Crow was not a case of a few laws; it was a situation in which the heavy hand of the state acted on all areas of life directly or indirectly.
In the modern context, you don't have to deal with the problem of government malevolence, at least with respect to minorities. But you do have questions about whether or not the effects are the ones you desire. It's usually assumed that if you pass a civil rights law, it will affect all blacks and all whites. But one of the things that's quite striking about the data is that the spread between the top and the bottom of the black population has gotten greater. One possible explanation is that civil rights laws tend to help those people who are in the upper end of the distribution and tend to hurt those individuals who are toward the bottom. Those people on the top are the people who get hired, and you know they'll do pretty well. You know that there's less likelihood that you will want to fire them. They help you meet whatever requirements as far as quotas and so forth, and so by all means you hire them.
But the case is different for those individuals who are less fortunate. If you know that you can't fire them because of anti-discrimination laws, the tendency is to let them languish rather than hiring them at all. The dismissal costs are just too high. So you get a huge dispersion effect. Well-off blacks are made better off and poor blacks are made worse off by these laws.
The second thing these statutes do is say, in effect, that minority workers are no longer allowed to use good old-fashioned competitive mechanisms to achieve entry into a market. If you're black, you can't get a job by underbidding a rival white worker and showing you're every bit as good. That option is not open to you--you can't compensate the employer for his perceived greater risk. That means that people who are on the outside cannot use price-cutting techniques to improve their chances.
Another problem is that the civil rights laws systemically make it impossible to rely upon standardized testing to figure where people stand relative to their peers in a given market. The net effect is to force people back on stereotypes--racial or otherwise--when they make hiring or other personnel decisions.
When you have a statute which interferes with contractual freedom, it's going to reduce the total level of output and increase the total level of bureaucratic wrangling. Everybody who's a minority member is going to be victimized by that just the same as everybody who's a majority member. You have a situation in which there's less to go around and, no matter how clever you are with matters of distribution, people are always going to feel aggrieved when there's a shortage.
One of the things that is very clear about Americans today is that every group in society regards itself as a victim of discrimination. If you run a comprehensive survey of white males, white females, black males, black females, and members of other minority groups, you can't find people who don't feel that they are getting paid less than what they are worth for the work that they do. That means that you have a real morale problem because there is no way that you can satisfy everybody simultaneously.
What we have to do is find a way to get out of this cycle. The only way in which we can do it is to keep the government as far removed from employment relations as possible, except under those very rare circumstances where we think that there's an employer who has a monopoly position.
Reason: How would people be better off if we didn't have civil rights laws?
Epstein: For one thing, the number of job opportunities that would be available would probably increase because the cost of hiring somebody who's marginal will be reduced. When you look at the numbers, it is quite striking how much the black unemployment rate rose after the various civil rights reforms of the 1960s.
In any complicated social problem it's very difficult to make after-the-fact explanations because all sorts of things are going on. But if you're trying to figure out the level of black improvement in the United States in real terms, it was better in the period between 1946 and 1964 than in the period 1975-94. The greater improvement in the first period can be attributed to two things. One was a series of open-market principles that allowed people to move back and forth. The other was the emergence of a new dominant social consensus that the past practices of discrimination were just a mistake. You can check the data, but I think it will show you that, when controlled for education, etc., the ratio of black earnings relative to others rose very rapidly during that period. Basically, close to parity was achieved by 1963, 1964 with the passage of the civil rights acts.
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