Playing Favorites (and Losing)

Preferential Policies: An International Perspective, by Thomas Sowell, New York: William Morrow and Co., 221 pages, $17.95

"The ingredients of political success and the ingredients of social progress are not only different but often antithetical." This observation, which opens the final section of Preferential Policies, neatly sums up the depressing conclusion to which Thomas Sowell's research brings us.

If we define preferential policies as those policies which "involve a differential application of rules and standards to individuals originating in different groups," then governments around the world now pursue them. They do so despite the evidence that such policies usually fail to achieve the desired ends and in defiance of the fact that they often cost the losers more than is gained by the winners. What is depressing about all this is that political success can still be secured amidst the ruins of social policy. The failure of preferential policies, it would seem, is invariably greeted with a clamoring for more.

The great strength of Professor Sowell's study is that it courageously maintains that, while "current political feasibility may be the touchstone of the professional politician, it cannot be the last word for others"; it challenges others to examine the evidence and rid themselves of their illusions about preferential policies.

Focusing on preferential policies that differentiate among discrete social groups, rather than on those which differentiate between men and women, Sowell investigates "the actual consequences of such procedures, regardless of their rationales or hopes, and regardless of whether they are called by such general names as 'affirmative action,' 'compensatory preferences,' 'discrimination,' 'reverse discrimination,' or by a variety of more specific terms in particular countries, such as 'Africanization,' 'white supremacy,' or 'sons of the soil' preferences." The product of his investigations is an impressive and important study which deserves a wide readership.

The book is divided into two parts. The first offers a wide-ranging historical account of the results of preferential policies around the world. The second attempts to identify the illusions which have driven the makers of such policies.

Part one is based on a study of the mechanisms and consequences of preferential policies around the world; Sowell pays special attention to programs in India, Nigeria, Malaysia, South Africa, Sri Lanka, and the United States. The contexts in which preferential programs have developed, Sowell is careful to note, differ considerably. Nonetheless, some common and striking patterns emerge.

First, preferential programs, even when defined as "temporary," have tended "not only to persist but also to expand in scope, either embracing more groups or spreading to wider realms for the same groups, or both." Second, within the groups designated as recipients of preferential treatment, the benefits usually go disproportionately to the more fortunate. Third, group polarization tends to increase with the implementation of preferential policies. Fourth, fraudulent claims to membership in designated beneficiary groups are widespread. And fifth, while there is plenty of written discussion of the rationales, mechanics, and inputs of preferential programs, there is a great dearth of information on policy outcomes.

If the first four observations are accurate, the fifth is hardly surprising: No one likes discussing his failures. And Sowell has plenty of evidence to suggest that his first four observations are indeed plausible.

The longevity of "temporary" programs is attested to by Pakistan's preferential policies favoring the Bengalis of East Pakistan, who were "underrepresented" in the civil service, the military, business, and the professions. First advocated in 1949 as measures to last 5 to 10 years, these policies were extended by the late President Zia until 1994—a date more than 20 years after East Pakistan broke away to become the independent state of Bangladesh.

Even the ruling elites sometimes recognize that preferential policies tend to favor the better off within designated beneficiary groups. The Malaysian prime minister, Dr. Mahathir, made that clear when he admitted that a very few Malays in that country had waxed rich "because of a policy of a government supported by a huge majority of poor Malays." In this case the policy was justified on the grounds of "racial ego": Malays, in Dr. Mahathir's view, were willing to put up with "the unseemly existence of Malay tycoons," since it meant that not only the Chinese could boast of such excesses.

Fraudulent claims to membership in designated beneficiary groups are not surprising. Economic theory tells us that if the price of a good falls, demand for it will rise. So it is with the good of membership. What makes this all the more likely is the fact that, in so many cases, no "natural," cohesive groups existed in advance of the political incentives created to foster their development—a point well made by Donald Horowitz in his important study Ethnic Groups in Conflict.

But it is Sowell's suggestion that preferential policies tend to cause group polarization that is the most disquieting of all. If this assertion is at all accurate, it suggests that the costs of such policies will be greater than many are willing to contemplate. In the Sri Lankan case, if Sowell's historical and political analyses are to be believed, the result was civil war and the destruction of a peaceful and potentially prosperous society. This hypothesis needs the most careful consideration and deserves to be the subject of fuller scholarly inquiry.

The second part of Preferential Policies, however, suggests that the issue is unlikely to receive such attention. Here Sowell makes clear how much the makers and defenders of preferential policies are governed by a number of ruling illusions. The most important of these is the illusion that they have the knowledge to exercise control over social forces through policy mechanisms.

They have little appreciation of the idea that policy can have unintended consequences. In Malaysia, for example, faculty members are pressured not to award failing grades to Malays. One consequence of this has been a decline in standards which has so devalued Malaysian medical degrees that many countries have ceased to recognize them—thereby placing at a disadvantage not only the other races in the country but also the Malays. This is to say nothing of the damage to morale among teachers and the resentment of the able Malays.

Yet the illusion that control can be exercised persists. While governments are slowly beginning to recognize how limitations of knowledge make central economic planning no more than a fantasy, they are a long way from acknowledging that the very same problems beset the makers of social policy.

The problem, however, is that for ruling elites the desire for political success makes the temptation to pander to the most illiberal sentiments of the community almost irresistible. Votes can be won by persuading people, or encouraging them in their beliefs, that they are the victims of history and circumstance, deserving of compensation and preferential treatment—now! The promise of the "quick fix," Sowell notes, is always attractive, even if it is never effective.

Moreover, preferential policies may be self-perpetuating. They encourage people to see themselves not simply as citizens or individuals but as the bearers of the claims of particular collectives. And so they encourage people to view the members of other communities not as fellow citizens but as competitors for the spoils of politics. This cannot make for harmonious social relations but only for the "continued drift in the direction of group polarization."

Is there a solution to this problem? It is not the purpose of Sowell's study to propose any; his intention is to expose the folly of preferential policies rather than tell us how to eliminate them, along with their destructive tendencies. Yet he does make some contribution on this score.

If political feasibility is the touchstone of the professional politician, who is unlikely to act unless convinced that his constituency will buy his policies, then it becomes crucially important to build a consensus of understanding which rejects policies that are harmful over the long term. And "once there is a consensus on what [really] needs to be done, that in itself changes what is politically feasible." In pointing out the "dangers and disasters" entailed by preferential policies, Sowell is himself contributing to the development of such a consensus. In this regard he should be commended for his efforts.

Chandran Kukathas is an assistant professor in the Department of Politics at the University of New South Wales.