Abstract
Past racial subordination resulting in significant inequality creates a “transition problem” of determining how to deal fairly with the legacy of an unjust history. I show that – in the presence of continued social segregation and when human capital spillovers within social networks are important – the consequences of past discrimination may persist indefinitely, absent some racially egalitarian intervention. I conclude that under such conditions “color blindness” – that is, official indifference to race in the formulation of public policies – is NOT an adequate response to this problem, and that “affirmative action” (i.e., policies whose explicit objective is to create more equal social outcomes between racial groups) is ethically justified.
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Notes
The “exogenous-wage” model in this section borrows directly from Bowles et al. (forthcoming). The “endogenous-wage” model to follow is being presented here for the first time.
The assumption of homogeneous ability at the individual level is not critical for the result. What matters for my argument, if ability is taken to be variable in the population, is that the distribution of endowed aptitudes be the same for the both groups. This is what Loury (2002) calls the Axiom of Anti-Essentialism
Convexity of c(σ) amounts to assuming diminishing marignal returns to network quality. Moreover, concavity of w(x) follows when workers are paid their marginal products if high- and low-skilled labor are complements in production.
Thus, φ(σ)≡w−1(c(σ)), hence,
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US Supreme Court. 1954. Brown v. Board of Education, 347 US 483.
Acknowledgements
This paper draws heavily on my joint work with Sam Bowles and Rajiv Sethi (Bowles, Loury and Sethi, forthcoming), though I am solely responsible for the analysis to follow, for the opinions expressed herein, and for any errors.
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Loury, G. The Superficial Morality of Color Blindness: Why “Equal Opportunity” May Not Be Enough?. Eastern Econ J 39, 425–438 (2013). https://doi.org/10.1057/eej.2013.35
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DOI: https://doi.org/10.1057/eej.2013.35