From: andreag@cco.caltech.edu (Andrea Lynne Gallagher)
Subject: Re: Libertarianism vs. government
Organization: California Institute of Technology, Pasadena
Date: Fri, 24 Jul 1992 16:27:21 GMT

matt@physics.berkeley.edu (Matt Austern) writes:

>scottj@gumedlib.georgetown.edu (John L. Scott) writes:

>> did, another insurance company would be insane not to take advantage
>> of the situation and offer you (and *millions* like you) a contract
>> with no such clause.  This goes double in a libertarian society with
>> no government mandated insurance where insurance companies would be
>> forced by the market to provide maximal services for minimal fees.
>> An insurance company in such a marketplace would be committing
>> suicide if even a small percentage of their potential customers
>> refused to sign their bizarre contract.

>An interesting theory.  Maybe even a true one.  Still, I'm a
>physicist, and I like to see empirical evidence for theories.  Has
>this actually been the case in societies with pervasive racism?  In
>such societies, has economic competition between insurance companies
>actually worked to eliminate the damage done by that racism?  

Another poster has already suggested Thomas Sowell's _Preferential_
Policies_, but I figured I would pull out some relevent examples.
Since you are interested in actual cases, I can't talk about
insurance.  But I think the principles apply to insurance as well
as to other industries.

Since you mention societies with pervasive racism, let's start with
South Africa.  Early in this century South Africa started constructing
their aparteid system.  Each of the laws passed were used to push 
blacks out of the jobs and industries where they were successfully
competing with whites.  One of the big struggles was to get blacks
out of the well paying gold and diamond mining jobs. The first laws
prohibiting the hiring of blacks for skilled and managerial positions
in the mines was opposed by the mining companies and widely ignored.
The white labor unions pushed for stronger enforcement, as well as
for a minimum wage at a level that they were happy with.  Between
pressure on the government from white labor and laws that priced
their skills out of the market, South African blacks were soon 
relegated to unskilled, dead-end jobs in the mines.

Assuming that the mining companies are as racist as the rest of the
white population, it still took the legal and punitive power of the
government to exclude blacks from parts of the labor market.  If one
of the companies could have instituted racist hiring practice at
any time before the laws were passed, why didn't they?

Another example, closer to home, is bus segregation in the Jim Crow
South.  The trolley companies that operated before the segregation
laws were passed knew that trying to segregate their trolleys would
just end up losing them customers.  They lobbied against the laws 
when they were being considered, and they were slow to enforce them
when they passed.  In such racist societies as this, why do you need
government laws to enforce racism in the marketplace?  Because stupid
discrimination costs you, and you'll loose money to the competitor
down the street who isn't stupid.  But if a government is stupid,
there's nowhere to go.  

This is why most libertarians want to put more restrictions on a
government than on companies.  And doesn't just work on racism.
I can generally ignore the stupid ideas of a given company, but
when the government has a stupid idea, I'm stuck with it.


Yr. Obt. Svt.
Andrea Gallagher


-- 
Andrea L. Gallagher  andreag@tybalt.caltech.edu	  (818)797-8370
_______________________________________________________________
   	 Oh! Empiricism! Is THAT all you have to offer?!
        	    -Rosencrantz (or Gildenstern) 
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