In Praise of Chains: How Public Choice Helps Us Understand and Fight Racism

In American politics, it is sometimes claimed that democratic majorities must never be “in chains,” as the historian Nancy MacLean has recently reminded us. This phrase is a truly remarkable piece of loaded language, because nobody likes chains. Chains are awful! And everybody likes democracy, provided we collectively forget about the times when democracy delivers bad policies, like stigmatizing and persecuting minorities.

Loaded language is a powerful tool, but it’s easier to use it for bad ends than good ones. Consider the following sentences. Strictly speaking, their factual content is not wrong at all:

Sometimes a secretive plot by a highly motivated and well-defined minority can end up putting democracy in chains. This was the case when African-Americans and their allies subverted the popular and democratic regime of Jim Crow.

Now, Jim Crow was an evil system. It deserved to be subverted, and of course it should never have existed in the first place. We should celebrate the secretive plotters who, in achieving victory over Jim Crow largely through the non-democratic court system, left our nation much better off.

Given the title of MacLean’s new book, Democracy in Chains, and the fact that Jim Crow seemingly commanded a popular majority in the South, one might half-expect that MacLean is an apologist for Jim Crow, and an opponent of the anti-democratic scheming that happily defeated it. But instead, thankfully, she celebrates the students, teachers, parents, and lawyers who plotted the movement. MacLean even dramatically recounts some of the students’ exploits in Virginia:

Absolute secrecy was essential… The three dubbed their plan the “Manhattan Project”… they recruited additional leaders to form “the core strike force” of twenty… (pp. 15-16)

How does MacLean reconcile her support for what ultimately was a lawsuit-centered strategy with an ideal of majoritarian democracy? First, rhetorically, she characterizes the efforts as a form of “collective organization”:

Collective organization, including strikes, was how the disempowered became strong enough to right the balance against the elites who lorded over them in those days… (pp. 14-15)

Second, she claims that Jim Crow actually lacked a level of majority support:

In May 1954, the justices announced their verdict in Brown v. Board of Education. Lost to all but the scholarly literature is the fact that most of Virginia’s white citizens were inclined to accept it. Hardly any liked it, but it was the unanimous decision of the highest court in the land, after all. More than a few knew, too, deep down, that the system had been grossly unfair; seeing the latest ruling as definitive, they took the end of segregation to be beyond their control. (p. 19)

And third, MacLean is at least a little more Madisonian than she often lets on:

[O]ne of the main goals of the U.S. Constitution’s famed checks and balances was precisely to keep sudden swings of public opinion from undermining political institutions… this constitutional system has helped make the United States the most stable republic in the modern world. (p. 8, p. 225)

So what stopped Jim Crow? It took brave activists and lawyers, a court decision in keeping with American law, and then reluctant majority acceptance of the decision. At that point, MacLean says, only Southern “elites” still cared to fight desegregation.

Is that a story of “democracy” stopping Jim Crow, or a story of the American system of government stopping Jim Crow? It seems to us MacLean wants to say that the American system worked to stop Jim Crow only because a majority stood behind the results. But we think it’s clear enough that the Virginian majority MacLean imagines standing in favor of Brown was ushered to a position of acceptance by the actions of truly brave people who did not know whether they had majority support (indeed, even today it is apparently known only to “the scholarly literature” that they did have that support), combined with the appropriate and stern dictates of the Supreme Court.

Majorities alone and unaided are not always right, and MacLean acknowledges this. For example, why hadn’t the United States already banned slavery by the 1830s? A big reason, MacLean says, is that, well, unfortunately, Americans did not want to ban it:

[John C.] Calhoun and his peers knew the cold reality that they were practicing a type of capitalism that would not pass democratic scrutiny much longer. Even if those outside the South were not prepared to abolish slavery outright, let alone grant its victims civil and political equality, they were increasingly inclined to see the institution as an affront to the nation’s founding principles—and a mortal threat to their own economic and political future. (p. 9)

Calhoun probably didn’t think in this way, because he mistrusted banking and finance, and he would have been loath to associate slavery with anything that he actually thought was immoral. And whatever he thought, he would not have used the word “capitalism,” which wasn’t coined until 1850, the year of his death.

But terms can sometimes be contested, and that’s true for both “capitalism” and “democracy.” In the hands of a determined writer, “capitalism” can mean just about anything. Democracy, meanwhile, might mean whatever the majority of folks would vote for, but in that case we have to admit that democracy often oppresses people of color, or gay people, or poor people, or people who follow a minority religion. In those cases democracy can use a few good chains. But why would democracy occasionally do things like that? Can we come up with a better account than “gosh, sometimes people are just assholes”?

Fortunately, we who care about dismantling racism and other forms of oppression know of a set of powerful insights about political economy known as public choice economics. As systematized by James M. Buchanan, Gordon Tullock, and many others, public choice economics helps explain the behaviors of majorities, minorities, elected officials, and special interest groups of every type, whether righteous or wicked. It also helps explain how, with the best of intentions, a democratic majority still often ends up behaving like a bunch of assholes.

Now, public choice does not aim directly at dismantling (or supporting) racism; it looks at political economy in a highly abstract manner. This abstract approach, though, makes it potentially a useful tool in a wide range of issue areas, and racism is certainly one of them.

Although the field of public choice is relatively new, the outlines already exist of a vast historical-economic research project, one that describes both the rise and the fall of American apartheid, using tools derived from public choice theory to make sense of how the government was mobilized for racist oppression, keeping firmly in mind that in a democracy both open majorities and insular minorities can sometimes be tyrannical. Or liberating.

Public choice, though, is rather value-neutral, which means that—like the dirtier tactic of loaded language—it can be used for good or bad ends. MacLean acknowledges as much: “The field of public choice economics indeed created useful tools for analyzing the incentive structures of public life. Liberals, too, could use the resulting insights” (p. 85). She points to Cass Sunstein as a contemporary liberal who does so. And she says public choice ideas were used for good ends by Knut Wicksell, the pioneering Swedish economist who inspired Buchanan:

Most of [Buchanan’s] contributions were “reiterations, elaborations, and extensions” of what Wicksell had first identified. … Buchanan found a way of thinking about fairness in Wicksell’s work that matched his own inclination as a man of the midcentury right (which was ironic, because Wicksell was a man of the left who had in mind disenfranchised wage earners who were being taxed for the projects of a monarchical government in which they had no vote). (pp. 42-43)

It therefore matters a great deal precisely who uses public choice to tell the story of American apartheid. With public choice and a little loaded language, almost any story might be told, as we showed at the start of this essay.

So far, the disciples of public choice have generally told a story of heroism, of brave plotters who relentlessly used non-democratic methods like the court system to destroy unfair racist laws and government practices. This story is one that every good American should applaud.

Among the best starting points on race and public choice is David E. Bernstein’s Only One Place of Redress, a book of legal history inspired by public choice that examines how African-Americans used the courts to challenge unfair labor restrictions that they faced in the Jim Crow era. Using democracy, white southerners had passed laws that made it hard for African-Americans to do almost any work besides farm labor. Other laws, called emigrant agent laws, made it difficult for African-Americans even to leave the South. The effect was to hold captive a population of workers who were denied career or educational prospects of any other kind.

Bernstein tells the story of how African-Americans fought and sometimes defeated discriminatory measures in court, not just in the South, but across the country. Sometimes white supremacism came in the most innocuous and even fine-sounding democratic guises. Plumbers’ licensing is a good example:

Licensing statutes for plumbers generally delegated the power to license individuals as plumbers to a licensing board composed of members appointed by the mayor and/or city council. Not surprisingly, local plumbers’ unions, representing the politically best-organized plumbers, exerted a great deal of influence over who was chosen to serve on boards of examiners. The Plumbers’ and Steamfitters’ Union, affiliated with the American Federation of Labor (AFL), excluded African-Americans throughout the Lochner era.

Plumbers’ unions were discriminating against African-Americans. Though not, as one might guess, because of Lochner. Rather in spite of it: Justice Rufus Peckham, the author of the Lochner decision, denounced licensing statutes as a wrongful infringement on the freedom of contract, which he strongly supported. In the case People ex rel. Nechamcus v. Warden, Nechamcus, a master plumber, complained that he could not get a license owing to his Russian nationality. The union rejected him as a member of a minority.

Nechamcus lost. In dissent, Justice Peckham denounced the license regime’s harmful effects; he held that licensure created a monopoly for privileged (and usually white) people, while excluding all others. The majority opinion in the case meant that African-Americans and many other minorities were kept out of the plumbing trade—in New York state of all places (Bernstein, pp. 32-33).

Alas, democracy won, and minorities lost. But it’s worth taking a closer look at licensing laws to show what insights public choice can offer.

One short and simple insight here concerns power unfortunately wielded by strange coalitional bedfellows. The public-choice economist Bruce Yandle wrote of a coalition between bootleggers and Baptists, which has become an enduring metaphor. In this coalition, Baptists want prohibition of alcohol because they think drinking is immoral; bootleggers want prohibition because they stand to make a lot of money by selling alcohol to drinkers.

In general terms, coalitions often arise even when members’ motives are badly aligned. A “good” group, like a group of honest regulators, might want plumbing licensure to guarantee safe and competent work. They’d be the Baptists here. But a bad group could want the same law for a completely different reason—it would give them a monopoly, which would drive their incomes up. And an even worse group could also want the very same law—because they’re racists, and they want to make sure that only white people get to do the work.

These groups don’t have to like each other. They don’t even have to work together. They can even hate one another, just like the bootleggers and the Baptists. The result is the same: Both lobby in the same direction. The law they want can still command a majority, and get passed, and then be used to bad ends. In the case of plumbing licensure, just wanting clean water puts you—a Baptist, perhaps—on the side of the racist bootleggers, who want an all-white plumbing profession.

That’s a difficult problem, because there’s nothing wrong with wanting clean water. And pretending that the problem doesn’t exist won’t make it go away; it’ll only make the bootleggers harder to find. Public choice cautions us to look very, very carefully at what looks like neutral legislation, and it tries to model the cases when laws are apt to be abused.

Another central insight of public choice is that when a small, well-defined group of people stands to gain or lose a great deal, that group will be highly motivated to act. But when a large number of people stands to gain or lose a pittance, they may not act at all, and at any rate they won’t spend too much when the stakes are low. Public choice economists call this the problem of concentrated benefits and diffuse costs.

Concentrated benefits and diffuse costs explain a great deal about special interests and lobbying in a democracy, even if we don’t pass any judgments about the justice of the various efforts: If each taxpayer stands to lose five cents a year, and if the special interest can capture five cents times three hundred million taxpayers, you can guess which side will work harder in the political battle to come.

In the case of plumbers’ licensing, the first special interest is the plumbers’ union, whose private economic interest lies with keeping the number of plumbers few, and possibly with making sure that they stay white. Restricting the number of plumbers raises the price of those plumbers’ labor, and the racists gain the satisfaction of punching a group they dislike. It’s therefore easy to see how exclusionary business practices serve their narrow self-interests, whether racist or otherwise.

Acting on these narrow interests is a case of what public choice economists call rent seeking, that is, the pursuit through political or other means of greater economic returns than efficiency interests alone would offer.

Of course the plumbers’ interests clash with consumers’ interest in having relatively affordable plumbers. The latter, though, is a diffuse interest: Although we all share it, we usually don’t give it much thought, and it’s small enough that we might not even notice when we’re not getting it. No one but a plumber (or maybe a policy wonk) gets really excited about the price of plumbing.

Consumers who are anti-racist have another relevant interest, of course: They want to make sure that they aren’t supporting a racist labor system. But that’s also a diffuse interest, because verification can be difficult; the fact that your plumber today happens to be white doesn’t tell you very much, and even repeated instances of white plumbers won’t establish a pattern of discrimination. Nor will one black plumber establish the opposite. And even the most anti-racist people in the world have only limited time to spend on plumbing in particular. The diffuse interest of anti-racism in plumbing will have a hard time achieving much politically, and public choice explains why. That interest may be righteous indeed—we think it is—but good luck seeing it instantiated through democracy.

As a result, special interests sometimes get to write legislation with racist effects. They get a little help from the ‘Baptists’ to get it over the finish line, and that’s how such a bill can become a law. Public choice explains why a plot against the public interest can often win, even in a democracy.

But the plumbers’ union isn’t the only special interest here. A second special interest also exists, albeit one that most of us can readily endorse. This group cares a great deal about the profession of plumbing, only they’re anti-racist, and they want plumbing to be open to everyone who can do it. These are minority plumbers. They also stand to gain or lose a concentrated benefit, namely an honest living as a plumber. And they have a strong incentive to organize and protect the access to the profession to which they are entitled.

And this brings us to another insight of the public choice school: Organization matters. Diffuse interests are weak in part because it’s hard to form a dedicated organization to further them. Concentrated interests form organizations much more readily, and these organizations tend to get power, whether we judge their aims as good or bad. The history of black professional societies in the United States offers many instances of what we might call benign special interest groups, groups that sought to reap the concentrated benefits that would accrue to them from fair treatment, but that were denied to them by the rent seeking of others.

Why, though, did Mr. Nechamcus lose? It could be that he was an immigrant with a weird name, a man whose community ties were relatively weak, and one whose practical equality before the law may have been impaired: When it’s a question of some Russian guy, perhaps with a strange Russian accent, and he appears to be arguing against clean water itself, well…voters may not ask too many questions. But public choice says we should, because the damage that’s done behind the scenes can be significant. Bernstein notes:

The efforts of the plumbers’ unions to keep African Americans from getting licenses were extraordinarily successful. In some states, examining boards required a union apprenticeship before a potential licensee could even qualify to take the licensing examination. Because unions banned African Americans… they could not even qualify to take the test. (p. 36)

Public choice explains how all of this could happen even outside the Jim Crow South. Bootleggers and Baptists worked together, whether wittingly or not. Concentrated benefits to the union outweighed diffuse costs to a public that was well-intentioned but badly organized and insufficiently motivated. And so rents were sought, and won by whites, and minorities suffered.

The alert reader will notice that we’ve departed from value-neutral language. That’s on purpose. Although academic economists may aspire to value neutrality, public policy cannot do so. Public policy holds values and takes sides, and we take it for granted that anyone who has read this far views racism as antithetical to the American ethos.

MacLean’s Democracy in Chains certainly holds values and takes sides. A core value of the book, anti-racism, is one we share. We also agree with MacLean on the usefulness of public choice theory. Ironically, the best reading of the book might be that it is a work of public choice. After all, MacLean’s central thesis is that a small group of motivated folks working behind the scenes—the Koch brothers, of course, plus a few university professors and a built-up “cadre”—have put over policies that a majority of Americans don’t want. How could they get away with that, in a democracy? Well, uhm…see above.

The twist is that MacLean posits that these plotters knew public choice theory. To them, “concentrated benefits and diffuse costs” wasn’t a warning about a problem in democracy that needs to be guarded against and overcome, but an opportunity within democracy to exploit—for they were the ones who could receive the benefits! If public-minded intellectuals remain untutored about public choice, then (presuming MacLean’s tale about the current state of American democracy to be true) the public will remain at the mercy of plotters who are armed with public-choice insights. To the extent that MacLean’s book is misinterpreted as an indictment of the academic field of public choice, that sorry result could be exacerbated.

So the point here is not to dismiss Democracy in Chains, although others have criticized some of its scholarship and its general outlook. We do mean to affirm that public choice offers a powerful toolkit of insights that can be used to expose and strategize against racism and other forms of oppression that persist, perversely, under democracy. It would therefore be foolish for the opponents of racism to neglect or demonize public choice. Instead, let us learn and use public choice for good ends. That will mean incorporating the knowledge that when democracy is unfettered, it still sometimes reaches results that are downright evil. Not only is the tyranny of the majority still a real threat, but further, no democracy exists that is so pure and so unmitigated that the phenomenon of concentrated benefits and diffuse costs will not sometimes have its effect. When that happens, public choice theory may be able to tell us why, and knowing why will tell us which strategies may lead to justice.

Featured image is a fair housing protest in Seattle, 1964.