We’ve bailed out the banks, we’ve bailed out insurance companies, we’re bailing out the auto industry … you’d think by now that even the most die-hard Libertarians among us would throw up their hands and admit that some regulation of industry is good.
Well, not Richard Epstein, a Law Professor at the University of Chicago, who, in a recent Forbes.com editorial, rails against the Lily Ledbetter Fair Pay Act of 2009 because, well, it inteferes with the precious free market.
His first error is to say that the Obama administration intends to “ratchet up government regulation of labor markets,” and then point to the Ledbetter Act as Exhibit A in its agenda. However, the Ledbetter Act is not accurately called a government regulation of the labor market, but rather a piece of civil rights legislation designed to provide a remedy to women who have suffered from pay discrimination. (Yes, the Act does make a reference to the Fair Labor Standards Act of 1938, but this comes after references to several civil rights acts).
Epstein then says:
The implicit narrative behind the new bill is that discrimination is so woven into the fabric of the employment relationship that once injected, it can never be excised. Labor markets are thus deemed to be incapable of self-correction because of their ponderous lockstep operation year in and year out. It is as if personnel officials never seek to sort out productive from nonproductive employees. Annual reviews, promotions, demotions and reassignments are viewed as some extraordinary events that only rarely alter the original wage path.
Epstein justifies the means by the ends. Okay, let’s assume that acts of discrimination eventually undergo a “self-correction,” whatever that means. As a result, are the rights that the victim has for compensation — for justice — then extinguished? According to Professor Epstein they are.
And that reference to “self-correction,” which is obviously a homage to free markets. Haven’t we learned from the recent economic crisis that “self-correction” is something that can be downright painful and not something to be held up as an ideal? Something that warrants the enactments of regulations?
Lastly, his faith that discrimination that does occur will somehow be sorted out in the natural way of things is either wishful thinking, naive, or uncaring and dismissive.
Epstein then claims that the legislation will create more waste and unnecessary costs for companies because it will lead them “to initiate expensive programs to reevaluate individual workers to head off the inevitable litigation–at the risk of inviting still more needless litigation.” So, in his view, companies that in the past discriminated against women will suffer because they’ll have to spend time and money reviewing their books to make sure the discrimination is not ongoing. Boo-hoo. Hey, if I am a fair and just employer, I won’t have to have my business undergo a costly and extensive audit to determine if I have discriminated against women. I’ll know that I haven’t.
Then casually, and dare I say callously, Epstein remarks, “How serious is the problem of discrimination that generates the cause celebre?” Well, ask Lily Ledbetter and other women like her who have been treated with less dignity and respect than their male counterparts. Then comes a shot over the bow of civil rights laws in general:
Do these laws make sense in good economic times as well as bad? The short, if unfashionable, answer is no. The best legal regime for labor relations rests on freedom of contract, where the protection afforded individual workers rests in their ability to go elsewhere if they don’t like their current job.
The convoluted nature of this particular argument is, well, startling. Epstein is saying that laws that penalize discrimination should not be in effect if … they will hurt the wallet of the entity committing the discrimination. (Notice how I used the word wallet instead of pocketbook?).
Interestingly, earlier in his article, Epstein takes aim at the difficulties he sees in accurately and fairly calculating damages in cases where there has been pay discrimination going on for years: “damage calculations on the residual harm from earlier discrimination will generate large verdicts resting on obscure formulas.” How does such an exacting mathematical approach mesh with the assertion that discrimination laws may exist during good, but not bad, economic times. How exactly are good and bad determined, pray tell? Where is the line drawn?
And, again, Epstein predicts that the free market will come to the rescue when there is discrimination. Hey, if a company tries to pay women less than men, or will only hire whites and not persons of color, there is justice, after all, he says, and there need not be a penalty, because the victim can go find another job! I think historically there has been a name for that approach: it’s called Jim Crow laws, NINA (No Irish Need Apply), …
Yes, that approach has worked so well throughout our nation’s history. Just like the free market has.