The Wikipedia link you give summarized chapter vii "Capitalism and Discrimination" starting with:

> In a capitalist society, Friedman argues, it costs money to discriminate, and it is very difficult, given the impersonal nature of market transactions.

I've become rather jaded concerning models of human behaviors as made by economists without input from anthropology or experimental psychology.

The colonial empires of Europe followed a standard model of setting up different classes of people, with the Europeans at top, then a small social group to run the local systems, followed by the rest of the population. This is how a small number of British people were able to control India, for example.

Discrimination was built into the system, to the immense profit of Britain.

Similarly, in the US South, the rich white slaveholders convinced the poor white slaveholders that it was better to be white, and poor, than to be black. This continued after the treasonous South was defeated during the Civil War - the desire for white supremacy among the (white) dominant population was "worth" the costs of discrimination.

Since I didn't want to base my opinion solely on a summary on Wikipedia, I read through the relevant chapter at http://circuloliberal.org/livros/capitalismo-e-liberdade.pdf . On p93 I see something outright wrong:

"As noted in chapter i, the purchaser of bread does not know whether it was made from wheat grown by a white man or a Negro, by a Christian or a Jew."

If there's a market for that, then that information will be made available. Why do I know that? Because similar things already exist. Consider https://en.wikipedia.org/wiki/Pas_Yisroel "Pas Yisroel or Pat Yisrael (Hebrew: פת ישראל‎ lit:"Bread of an Israelite") products are grain-products that were cooked or baked with the participation of an observant Jew" and https://en.wikipedia.org/wiki/Chalav_Yisrael "Cholov Yisroel, is a Halachic term which refers to all dairy products, including cheese and non-fat dry milk powder, which derive from milk that has been milked under the supervision of a religiously observant Jew."

What I don't understand is, didn't Friedman, son of moderately observant Jews, know this?

"A businessman or an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a disadvantage compared to other individuals who do not."

Here's what happens. I decided to allow both black and whites to eat at my restaurant. This angers the local white population, who call me names, threaten me, and should I not back down, torch my business.

If I integrate I have a 5% change of making 10% more money, and a 95% chance of losing everything. (Numbers pulled from my butt.) And the police who might otherwise help protect my property are part of the white power structure.

What do you think I'll do? Hint: I'm no Medgar Evers.

Economically speaking, the switching costs can be too high to reach a more profitable state.

The idea that we should not have laws to prevent racial discrimination because that sort of discrimination cannot be distinguished from a personal taste preference of one singer over another is crazy talk - now. We have 54 years of experience with the the Civil Rights Act of 1964, and followup laws, to show how such a framework can work.

"He may simply be transmitting the tastes of the community."

So what?

I think it is fine to use the coercive power of the state to oppose a community which discriminates on the basis of skin color.

If libertarianism necessarily implies that such laws should not exist, then I can see why it's mostly white men who support libertarian beliefs.