I've noticed that this video of a, shall we say, race-conscious bureaucrat has been attracting a fair amount of attention. The video shows Shirley Sherrod, the Department of Agriculture's Georgia director of Rural Development recounting an encounter with a white farmer seeking some kind of assistance. As she says:
He had to come to me for help. What he didn't know while he was taking all that time trying to show me he was superior to me was I was trying to decide just how much help I was going to give him. I was struggling with the fact that so many black people have lost their farmland and here I was faced with having to help a white person save their land -- so I didn't give him the full force of what I could do. I did enough.
While the racial aspect of her remarks are of course abhorrent, I was even more struck by how much she enjoyed her position of authority and the power she held over this individual. Take this interaction and compare it to the private sector, for example a prospective borrower seeking a loan at a bank. In such an interaction the power of the racially-motivated clerk or loan officer is much reduced, as he or she knows that denying a loan to a credit-worthy applicant will simply result in that applicant taking their business elsewhere. The only loser in this example is the bank, whose racism is literally costing it money.
Compare and contrast this with the bureaucrat. What are the odds the bureaucrat would ever be fired or their racial decision-making in any way punished? Indeed, they may even be rewarded as denying government assistance simply means less paperwork and reduced hassle. And what recourse does the customer have? The government, after all, is the world's largest monopoly.
And yet so many of us conceive of the government as a benevolent force while the private sector is populated by the evil and greedy. It simply doesn't wash.
Update: It seems the woman in question, Shirley Sherrod, was not working for the government at the time the story she told took place but rather a non-profit organization.
Update: It seems the woman in question, Shirley Sherrod, was not working for the government at the time the story she told took place but rather a non-profit organization.
19 comments:
I think your counter factual is a bit of a strawman. It is mere hypothetical and rests on at least several rebuttable assumptions: 1. that there exist lenders to provide the lendee choice; 2. that the competitor lenders do not engage in the same sort of racist behavior; and 3. (a) that there is sufficient oversight of the loan officer that his actions would go punished (he’d be fired); or (b) that there are sufficient customers fitting the category of the lendee that consistent denial of loans will result in an appreciable difference to the bank’s bottom line, compelling action against the loan officer.
None of this is to suggest that the behavior of the Agri officer is anything but abhorrent. You’re depiction of her as a “petty tyrant” is dead-on and it highlights the importance of front-line government employees—an importance too often overlooked. It is to say, however, that private enterprise is no perfect salve. Haven’t we all suffered at the petty tyranny of cable providers? The fact is that many large corporations do a sufficiently large volume of business, and do it in businesses with sufficiently high barriers to entry, that they are able to routinely disregard the concerns of their individual customers. A similar phenomenon is manifest in the “contracts” that many of us enter into with large corporations—while they certainly include promises exchanged for promises, there has been no meaningful bargaining between the provider and the customer, and the customer is really at the whim of the provider so long as the customer wants the provider’s product. See, e.g., forced arbitration clauses in cellular phone contracts.
I think your counter factual is a bit of a strawman. It is mere hypothetical and rests on at least several rebuttable assumptions: 1. that there exist lenders to provide the lendee choice; 2. that the competitor lenders do not engage in the same sort of racist behavior; and 3. (a) that there is sufficient oversight of the loan officer that his actions would go punished (he’d be fired); or (b) that there are sufficient customers fitting the category of the lendee that consistent denial of loans will result in an appreciable difference to the bank’s bottom line, compelling action against the loan officer.
I don't think my assumptions rest test the bounds of what can be realisticaly assumed. There are numerous banks, and in the age of the internet you are not restricted to only those in your town. Yes, I suppose they could all be racist, but that strikes me as a rather extreme scenario, particularly in the age of institutions such as LendingTree.com. I also do think that someone who consistently denies loans on the basis of race stands a good chance of being fired, as that person is costing the bank money. Someone who fails to meet their numbers is unlikely to be promoted. Also, I can only wonder how many people are so thoroughly racist they would deny themselves a commission just out of spite. In any case, even if the person isn't punished, the point still stands that the customer has alternatives.
It is to say, however, that private enterprise is no perfect salve. Haven’t we all suffered at the petty tyranny of cable providers?
Sure, but it is also no coincidence that this is another area where government has acted to restrict competition:
http://togetrichisglorious.blogspot.com/2009/06/broadband-adoption-and-barriers-to.html
The fact is that many large corporations do a sufficiently large volume of business, and do it in businesses with sufficiently high barriers to entry, that they are able to routinely disregard the concerns of their individual customers.
Well, again, I would point out that in many of these instances -- such as cable providers -- the barriers to entry are in the form of government regulation and intervention. This isn't the free market at work.
A similar phenomenon is manifest in the “contracts” that many of us enter into with large corporations—while they certainly include promises exchanged for promises, there has been no meaningful bargaining between the provider and the customer, and the customer is really at the whim of the provider so long as the customer wants the provider’s product. See, e.g., forced arbitration clauses in cellular phone contracts.
Even if one accepts this, the point still stands that in dealing with the private sector that one has a choice -- such as with cell phone providers -- while this is clearly not the case in dealing with government. The argument is not that the private sector is perfect, but rather a superior alternative to government. Competition helps to check the worst instincts of the private sector, while it is non-existent in the public sector.
Yes, I suppose they could all be racist, but that strikes me as a rather extreme scenario, particularly in the age of institutions such as LendingTree.com.
Of course, racist lending practices for home mortgages are widespread and well documented.
Sure, but it is also no coincidence that this is another area where government has acted to restrict competition
Cable company treatment of customers has little to do with regulation. For instance, where I live, Comcast (the main traditional cable provider) is in fierce competition with two other providers (AT&T and another one whose name escapes me at the moment). Despite my choice of three providers I'm still subject to service visits that occur between 9:00 am and 12:00pm or 2:00pm and 5:00pm, and other such nonsense.
Even if one accepts this
One must accept it because it's both true and pervasive. Your points about competition and choice are wholly undermined in situations where there is no meaningful choice--in situations, like the cell phone example, where the whole industry subscribes to a practice, giving you the choice among different brands that subject the customer to the same maltreatment.
Also, I can only wonder how many people are so thoroughly racist they would deny themselves a commission just out of spite.
Please see Jim Crow South; e.g.,the Lunch Counter at Woolworth's in Greensboro, SC
Of course, racist lending practices for home mortgages are widespread and well documented.
Really? Instances where every single bank approached is racist?
Further, it is notable that in instances where racism has appeared to factor in lending, that other banks have stepped up to claim the profit:
http://en.wikipedia.org/wiki/Redlining#Challenges
Cable company treatment of customers has little to do with regulation. For instance, where I live, Comcast (the main traditional cable provider) is in fierce competition with two other providers (AT&T and another one whose name escapes me at the moment). Despite my choice of three providers I'm still subject to service visits that occur between 9:00 am and 12:00pm or 2:00pm and 5:00pm, and other such nonsense.
Evidence shows that customer service in the cable industry improves as competition increases:
http://www.businessweek.com/news/2010-05-18/comcast-customer-satisfaction-rises-as-competition-stiffens.html
I also doubt that 3 hour service windows are a sign of poor customer service, especially if other companies have adopted the same practice. My understanding is that service personnel spend all day travelling from appointment to appointment, and taking longer at one will result in a delay in the next one, which is why a window rather than an exact time is given. I know that the last two times I had TVs I bought online delivered to my house I was also given a 2-3 hour service window rather than an exact time of delivery because of the nature of the business.
I would also suggest that if this is a real annoyance that you switch providers.
One must accept it because it's both true and pervasive. Your points about competition and choice are wholly undermined in situations where there is no meaningful choice--in situations, like the cell phone example, where the whole industry subscribes to a practice, giving you the choice among different brands that subject the customer to the same maltreatment.
If this is both true and pervasive, why have I never experienced it? I can't recall anyone I know ending up in a legal battle with a cell phone company either. My last interaction with a cell phone company was when my contract with Verizon was up and my cell phone was broken. I went to the Verizon store to see if they would give me a new one for free, which they declined. So then I went and signed up with AT&T who gave me a free (ok, nothing is truly free -- subsidized) one.
And, again, at least you have a choice in whether to deal with cell companies or not. Try telling the IRS you aren't really interested in speaking with the auditor and see how far that gets you.
Please see Jim Crow South; e.g.,the Lunch Counter at Woolworth's in Greensboro, SC
The fact you have to reach back 50 years would seem to support my contention this is a minor consideration. Further, AFAIK Jim Crow was supported and enforced by the government. This is, after all, why they were called Jim Crow LAWS.
http://en.wikipedia.org/wiki/Jim_Crow_laws
I would also suggest that if this is a real annoyance that you switch providers.
Dear Colin, the point, again, is that you switching providers is useless because they all adhere to the same practice. It is a real annoyance. And one the market fails to address.
The fact you have to reach back 50 years would seem to support my contention this is a minor consideration. Further, AFAIK Jim Crow was supported and enforced by the government. This is, after all, why they were called Jim Crow LAWS.
A few things here: 1. I used it because it's an extreme example that directly refutes your notion that "no one would willingly forgo a commission." The rational economic actor idea is assailed routinely, I'm sure you've encountered it.
2. Jim Crow refers to an era. Much of the segregation was affected through law--laws widely popular including among the business community who you (I presume) would expect not to support them as they denied them a significant potential market--but much of it was done through private action. In the case of Woolworth (and other stores), it was a business decision to operate segregated lunch counters.
Finally, your comparison between the private sector and the public sector, as well as your insistent focus on choice as opposed to meaningless choice puzzles me. We can all agree that the government is not the private sector, does not endeavor to be the private sector, and does things the private sector does not due. It is curious to me that you think the IRS is an apt example; one answer might be that the social contract binds us to pay our taxes just as a contract with any other entity would bind a person to pay for what that person has received. Of course, there is choice (and, contra your choice-emphasis, meaningful choice) here, too: one could go to a different State.
As to choice, you're rather fond of declaring that the market is democracy in action. While I disagree with the merits of this equivalence, I'll indulge it for the time being. I don't think that you would look highly on a "democracy" where the choice was between voting Yes for the only candidate on the ballot or No (as in Saddam Hussein's Iraq); nor do I believe you'd look favorably on an election conducted between candidates with indistinguishable platforms. These meaningless choices undermine the value of democracy (value as in worth, not as in normative qualities), just as meaningless choice undermines competition and the market.
Dear Colin, the point, again, is that you switching providers is useless because they all adhere to the same practice. It is a real annoyance. And one the market fails to address.
First you have to establish that the problem you are referencing is actually a problem rather than just the nature of that industry (having servicemen out doing constant appointments is likely more efficient and thus saves money). I wish that when I went to the supermarket that there was never a line to wait in, but I also realize that having more cashiers would mean higher prices. These are the trade-offs we all make.
A few things here: 1. I used it because it's an extreme example that directly refutes your notion that "no one would willingly forgo a commission." The rational economic actor idea is assailed routinely, I'm sure you've encountered it.
You're knocking down a strawman. I never said no one would ever do it. Rather I said "Also, I can only wonder how many people are so thoroughly racist they would deny themselves a commission just out of spite." While I'm sure you can find someone out there who will forego a commission to satisfy their racism, I am skeptical they constitute a significant number.
2. Jim Crow refers to an era. Much of the segregation was affected through law--laws widely popular including among the business community who you (I presume) would expect not to support them as they denied them a significant potential market--but much of it was done through private action. In the case of Woolworth (and other stores), it was a business decision to operate segregated lunch counters.
In this context I would expect businesses to support Jim Crow, as to operate integrated stores would draw the wrath of much of their customer base, and thus would be a net loser.
In any case, I still fail to see how the existence of Jim Crow applies to the present day and undermines the implied assumptions of the hypothetical in my post.
We can all agree that the government is not the private sector, does not endeavor to be the private sector, and does things the private sector does not due.
I wish we could agree on this, but at least two of your statements are false. Given that a goal of many on the left and within government is for "single-payer" health care it is obvious that many endeavor for government to do what the private sector does. Further, the public sector competes with the private sector in package delivery through the USPS, which means it does do at least some things the private sector does.
My wish is for government to restrict itself to those things the private sector cannot do. This is not the case.
It is curious to me that you think the IRS is an apt example; one answer might be that the social contract binds us to pay our taxes just as a contract with any other entity would bind a person to pay for what that person has received.
I never said we shouldn't deal with the IRS. I think everyone should pay their taxes. I was simply pointing out that we don't have a choice in the matter, unlike with the private sector. As someone who favors choice (I'm pro-choice!), I recognize that we lose more of it everytime something is turned over to government.
Of course, there is choice (and, contra your choice-emphasis, meaningful choice) here, too: one could go to a different State.
Actually if you move states you still have to deal with the IRS. And is moving states really meaningful choice? Certainly it is choice of a certain level, but it doesn't even begin to compare with choosing, say, cell phone providers or what restaurant to eat at.
I don't think that you would look highly on a "democracy" where the choice was between voting Yes for the only candidate on the ballot or No (as in Saddam Hussein's Iraq); nor do I believe you'd look favorably on an election conducted between candidates with indistinguishable platforms. These meaningless choices undermine the value of democracy (value as in worth, not as in normative qualities), just as meaningless choice undermines competition and the market.
What meaningless choices? Where do these meaningless choices exist? I find that in the overwhelming majority of my choices there is meaning. This is non-specific and therefore difficult to respond to in more detail.
What meaningless choices? Where do these meaningless choices exist? I find that in the overwhelming majority of my choices there is meaning. This is non-specific and therefore difficult to respond to in more detail.
The meaningless choices I've detailed: between a cell phone company with a forced arbitration clause or another cell phone company with a forced arbitration clause or yet another cell phone company with a forced arbitration clause, for example; or between cable companies (and like providers) for another example.
States referring to other nation states, Colin. Not other subsidiary units of the United States, obviously.
Of course all of this conversation is pretty well mooted by the fact, as you note in the update, the woman wasn't working for the government.
The meaningless choices I've detailed: between a cell phone company with a forced arbitration clause or another cell phone company with a forced arbitration clause or yet another cell phone company with a forced arbitration clause, for example; or between cable companies (and like providers) for another example.
No, the choices between cable companies and cell providers are real and significant. Otherwise we would simply choose them at random. You are simply miffed that they are similar in one respect. And again, if this really upsets you, you can forego the product.
You only thing you prove with this example is that private companies at their worst are the same as government. I don't see how this in any way undermines my contention that the private sector provides choice while government does not.
States referring to other nation states, Colin. Not other subsidiary units of the United States, obviously.
Is that a real choice? Are you really taking the position that opting for different cell providers is a meaningless choice while switching countries is?
Of course all of this conversation is pretty well mooted by the fact, as you note in the update, the woman wasn't working for the government.
Only if one believes this means that no one in government wields their authority in an arbitrary manner.
Changing states is at least as meaningful a choice as changing cell phone companies--at least you get variation among the practices of states. It's hyperbole, of course.
One more real point, though, aren't you at all trouble by the dissonance in your own statements, claiming first that the customer service problem for cable companies is due to regulation and then, later, claiming that it's not a problem at all?
Forgoing the product is not a meaningful choice, we've been over this before. I find it extraordinarily disingenuous of you to continue to suggest it, as you did with regard to air travel.
Changing states is at least as meaningful a choice as changing cell phone companies--at least you get variation among the practices of states. It's hyperbole, of course.
Examine the obstacles to switching countries and compare them with switching cell phone providers. To compare them is absurd.
One more real point, though, aren't you at all trouble by the dissonance in your own statements, claiming first that the customer service problem for cable companies is due to regulation and then, later, claiming that it's not a problem at all?
There is no dissonance, I don't see your particular complaint as a problem. At first you just complained about the "petty tyranny of cable providers" but then it was revealed your complaint is simply that you have a 3 hour window to wait for the cable guy. I then demonstrated that as competition increases -- once government gets out of the way -- customer service improves.
It's another example of the success of deregulation. (I actually wrote a paper on this for my intermediate micro-econ class in grad school, demonstrating that improved competition in the cable industry -- mainly from satellite providers owing to continued regulatory barriers to true cable competition -- corresponded with reduced prices and increase choice)
Forgoing the product is not a meaningful choice, we've been over this before. I find it extraordinarily disingenuous of you to continue to suggest it, as you did with regard to air travel.
Before airline deregulation people didn't travel as much. Before cell phones were invented people didn't use them. Before cable TV, people didn't use it. These are real choices. Granted, living without these products is highly inconvenient, but the fact that people got along for so long without them suggests that other possibilities exist.
In any case, it is a far more meaningful choice than switching countries.
Plus, again, in both cell phones and air travel one has plenty of choice. This is typically less so with cable (my only choice for example is Comcast or satellite, although Verizon should become an option in the next five years following the DC government finally getting their act together).
Ben,
A couple of more thoughts. I was talking to my girlfriend tonight and she said that when she made an appointment to get her blinds installed that she was given a 4 hour window to wait. Combined with the fact that delivery companies also provide windows of service, it strikes me as further evidence that the three hour service window you are faced with is rather unexceptional and simply a reflection of the business model.
Just out of curiosity, how long do you think it should take? What is your rationale?
Further, with regard to meaningful choice, as I recall the rationale presented for why there was no meaningful choice in air travel is because people had no choice but to fly. But don't also people have no travel but not to eat? Or clothe themselves? Or house themselves? Does this mean we also do not have a meaningful choice in such areas? Does meaningful choice only exist in those areas that are complete non-essential luxuries?
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