The Becker-Posner Blog

Economics of Corruption--Posner

The word "corruption" is extraordinarily vague, and, in part for that reason, ubiquitous. Charges of corruption are everywhere. Notably, economically booming China is nevertheless said to be seething because of the corruption of local officials, and Chicago's mayor is being questioned by federal investigators about corruption in his otherwise very successful administration. The problem with the word is twofold. First, identical practices sometimes are "corruption," sometimes not. Second, despite the pejorative connotations of the word, the normative signficance of corruption is not always clear. Fifty years ago it was common in nightclubs in New York (maybe it still is--I haven’t been in a nightclub in New York in 48 years!) to have to give the headwaiter a tip in order to get a table, even if there were many empty tables. This was a form of bribery, but accepted as proper. Management knew about the practice and condoned it. The headwaiters were doubtless paid less than if they had been forbidden to accept these bribes, but that of course was not a clear gain to the nightclub; the nightclub presumably charged customers less because the full cost of the entertainment to them was greater by the amount of the bribe. So far, a wash; but if the bribes induced the headwaiter to be friendlier and more helpful to the clientele, the nightclub was better off. Likewise with tips for waiters and waitresses, despite the possibility that a generous tipper will get better service at the expense of other customers, to the harm of the latter. So what is wrong with bribing public officials to obtain public services, provided the practice is known and wages are adjusted accordingly? In effect, bribes shift the financing of public services from taxes to a combination of taxes and fees for service. By injecting a market element into public services, bribes can actually improve efficiency when used to get around rigid or inefficient rules. To recur to the 1950s in New York, municipal ordinances forbade contractors doing construction work to obstruct sidewalks and streets, but often it was impossible to do such work without creating at least minor obstruction and so contractors bribed police to look the other way. The net effect on social welfare was probably positive. But there are several problems that together make bribery of public officials on balance inefficient--and thus "corrupt" in an unequivocally bad sense. First, not all rules are inefficient, and bribes are bad from an economic standpoint when they subvert an efficient rule, as when a building inspector accepts a bribe to overlook a serious fire hazard. Second, without competition among bribe takers (in the New York nightclubs this was secured by the competition among the nightclubs themselves, which limited the amount of bribes that management permitted its headwaiters to receive), the bribe will exceed the cost of the public service being purchased with it, distorting the allocation of resources (though the higher taxes that would be required to compensate public employees who did not have bribe income would also have distortionary effects--all feasible taxes do). Third, delay and uncertainty are created when multiple officials must be bribed. And fourth, a bribery culture reduces pressure to repeal inefficient laws--in fact, it creates in public officials a vested interest in preserving such laws. In that respect, it is a protection racket. Since public corruption seems on balance inefficient, the question arises why it is so common. The answer is that corruption flourishes where the economy is heavily regulated but the legal framework is weak. The more heavily regulated the economy, the more irksome restrictions there are that will create a demand for methods of avoiding compliance with them, and bribery of the enforcers of the restrictions is one such method. The weaker the legal framework, the more difficult it will be for the government to prevent bribery, a classic "victimless" crime because bribery is a voluntary transaction; and it requires a sophisticated legal machinery to detect and punish such crimes. There is another and subtler effect of the legal framework. Unless there is an effective machinery for the impartial enforcement of contracts, people will be reluctant to do business with strangers. Economic activity will tend rather to be organized on the basis of familial and other personal relationships. In such a culture it will seem perfectly natural for public officials to exhibit favoritism toward friends and relatives, including persons who purchase their friendship with a generous bribe. Nepotism, clientalism, and bribery become substitutes for contract when the enforcement of contracts is undependable. In contrast, corruption should be rare in a free-market system with courts that enforce contracts honestly and dependably. So how to explain public corruption in America's big cities today? It seems less common than a half century ago, and perhaps that is because there is somewhat less economic regulation and also a somewhat greater professionalism in civil services, police, and the judiciary. Another factor is that most big cities have Democratic mayors, and the Presidency has been in Republican hands for almost two-thirds of the period since 1969; Republican attorneys-general are more likely to investigate and prosecute public corruption in Democratic-controlled cities than Democratic attorneys-general are. Becker discusses other causes of the decline in U.S. corruption in his comment. The persistence of corruption in some of our big cities may reflect the presence of immigrant communities in these cities, in which barter and other forms of reciprocal dealing based on (and constructing) relations of trust, extended family relationships, clan ties, and the like continue to organize significant economic activity and make it natural to think of public officials as "selling" public services to their friends and relatives. The problem of corruption underscores the importance of the legal framework to economic development. An honest, incorruptible police, criminal law enforcement machinery, and judiciary can increase economic efficiency by greatly reducing the amount of corruption (as well as in other ways), though it is equally important to have a commitment to free markets and a workable legislative and regulatory machinery to prevent economic activity from becoming encrusted with inefficient restrictions.

Comment on Corruption-BECKER

I agree with Posner’s basic approach to corruption, so I will elaborate on some ways to reduce corruption, refer to evidence where corruption actually helps performance, and offer a suggestion for why big-city corruption in America appears to have declined over time. I confine my comments to corruption in the public sector, although for every public official who is bribed, there is always a businessman, union official, or someone else in the private sector that is doing the bribing. By corruption I simply mean that public officials accept payments that violate some laws in order to affect the implementation of other laws or regulations. Corruption so defined is bad if it lowers efficiency in the economy or society- that is, if the cost imposed on everyone else exceeds the gain to an official. Good corruption raises efficiency, so while the corrupt official may gain, so does the economy and society as a whole. Clearly, in a country with bad laws, corruption by officials that enable businessmen and others to get around these laws may be helpful. The Soviet Union, for example, had terrible economic and other laws, and performed badly. Still, the widespread corruption that existed helped it to do much better than it would have if all officials followed the letter of the law. A preliminary study by a graduate student at the University of Chicago, Maxim Mironov, analyzes the effects of corruption on economic growth in 140 nations during the past decade. He finds that corruption in countries with weak institutions, defined by government effectiveness, the rule of law, and the quality of regulations, appears to help countries grow faster, whereas corruption in countries with good institutions slows down economic growth. For the remainder of my comment I concentrate on corruption that on balance is bad. Posner points out that corruption flourishes with a weak legal system, and with larger government. Obviously, if governments strongly regulate many activities, then companies, unions, and other groups that are regulated can do better if they can "bribe" officials to overlook or relax these regulations. So the wider is the reach of governments, the greater is the corruption potential. There was relatively little corruption in the Federal government of the US in the early 19th century primarily because the government did so little then. Other than narrowing the scope of government and strengthening legal institutions, what can be done to reduce (bad) corruption? One simple step is to improve the incentives of officials to act honestly. The incentive to be honest would be stronger when officials are better paid, and if they are fired from their well-paying jobs, and sometimes also punished rather severely if they are caught engaging in corrupt behavior. A few studies do support this conclusion that corruption thrives more in environments where officials are badly paid, such as policemen in Mexico. Corruption is reduced by greater competition between separate political jurisdictions and stronger competition for political leadership. This implies that corruption is lower in decentralized political systems compared to centralized systems. Various studies do indicate that democracies generally appear to have less corruption than totalitarian systems, although some of the corruption in totalitarian systems like the Soviet Union may be of the good kind because the laws are so bad. Corruption is reduced when information is more easily disseminated to the public. That is why a free press is such an important protector against greater corruption. The press is more effective in better educated societies, and various studies have shown that corruption is lower when education is greater. Education also helps cut corruption by improving political institutions, so part of the positive relation between the amount of corruption and the weakness of institution is the result of the positive connection between education and good institutions. Work in progress by Professor Edward Glaeser and others at Harvard University suggests that corruption in the US declined over time in part because education increased. This helps answer Posner’s question about why corruption in big American cities appears to have been declining. The steep growth in regulations over time would suggest growing, not declining, corruption. I believe the increase in education, combined with more vigorous competition among print and other media to disclose information about corrupt officials, and greater geographical mobility of many types of business have all contributed to the apparent decline over time in the amount of corruption in big cities.

Response to Comments on Affirmative Action--Posner

The principal criticism of my posting is that "merit," understood as doing well on exams (especially timed exams), is too narrow a basis for admission to college or law school and that affirmative action is a way of rectifying the mistakes caused by the overemphasis on that too-narrow criterion. My view is that reference to "merit" and "meritocracy" is misleading. A person is not "better" because he's a better exam-taker; for that matter, he's not "better," more "meritorious," because he has a higher IQ than someone else. The issue regarding standardized testing is whether it's a good predictor of college or graduate school performance. If it is, then people who do badly on the test, but are admitted anyway because of affirmative action (or because they're good athletes), are going to do poorly in college or graduate school and cluster at the bottom of the class. Now maybe though they cluster at the bottom of the class, they do well professionally because grades are not a good predictor of performance in the "real world." So the argument would be that blacks from poor families do badly on the SAT and in college and law school but nevertheless do well professionally, because SATs and LSATs and the rest of the educational testing apparatus are poor predictors of professional success. Now it would be odd if race were the explanatory variable here. That is, if you took two people otherwise identical in upbringing, parents' occupations, etc., but one happpened to be white and one black, on what theory would standardized tests underpredict the black's professional success relative to the white's? Presumably the relevant variable in explaining black-white test differences would be not race as such but such factors as parents' education, household income, early schooling, etc.--factors that might well be correlated with race, but that would not be identical with race. If parental income or some other such variable is thought to cause students who have in fact great professional talent and prospects to underperform in standard tests, then that would be an argument not for affirmative action on the basis of race, sex, ethnicity, etc., but for affirmative action on the basis of parental income or the other nonracial factor that was causing the difference in test scores. This is resisted because the colleges don't care about students from poor families, etc.; they just want a certain percentage of blacks. There is a special factor at work in law, the profession with which I'm most familiar, that casts particular doubt on the wisdom of racial affirmative action. That is the fact that to become a practicing lawyer, you have to pass the bar exam--another standardized timed test but one for which you can't substitute a take-home exam or a term paper. The black pass rate on the bar exam is shockingly low--something like 15 percent, compared to more than 60 percent for nonblack exam takers. I cannot see the sense of bending law school admissions standards in favor of applicants who are unlikely to be able to enter the profession after spending $100,000 or more for three years of law school tuition. A number of comments mentioned "diversity" as a valid ground for affirmative action in admissions to college and law school. I agree that one benefit of college education is meeting a more diverse group of young people than one might have encountered growing up in one's particular community, which might be a lily-white suburb. But the relevant diversity is not in the color of one's skin, but in attributes which, to repeat, while they may be correlated with race, are not identical to it. There are black people who really aren't different from white people, and it is unclear how their presence increases the diversity of a student body. Several comments from the right side of the political spectrum of our readership accused me of having a double standard--favoring or at least being willing to tolerate some discrimination against whites (i.e., some affirmative action) but not willing to tolerate discrimination against blacks. I plead guilty to the double standard. I do not think discrimination against blacks by whites, and discrimination against whites by whites, are symmetrical phenomena. A dominant group may discriminate some against its own members--that's what affirmative action is--but it's not going to go too far, whereas discrimination by the majority against a minority is likely to be far worse and more injurious. I am always interested and pleased when the comments go in unexpected directions, focusing on what I had thought distinctly peripheral aspects of my posting. I had said that I thought a theatrical producer should be permitted to refuse to hire a white actor to play Othello, or a black actress to play Desdemona. Several comments pointed out that there have been theatrical productions in which a white played a black, a woman a man, etc., and they noted that in Shakespeare's time, because women weren't permitted to appear on stage at all, female roles were played by adolescent boys--and since there were virtually no blacks in England and almost certainly no black actors, Othello was played by a white. So a white male was playing opposite another white male and why shouldn't that be permitted today? Well certainly it should be permitted, but the question is whether the producer should be deprived of choice in the matter. It is further true, as one comment points out, that while sex can be a "bona fide occupational qualification" under federal antidiscrimination law--and so a producer can insist that Desdemona be played by a woman, whatever Shakespeare might have thought of that--there is no BFOQ for race. I consider this rule of law mistaken. It seems to me that, at least if one is speaking of producers in the private sector, "discrimination" in the form of matching an actor's race, etc. to that of the character he or she is playing should be permitted. The impact on vocational opportunities for members of racial and other minorities is likely to be small. Of course there are not as many black characters in drama as there are white ones, but then there are not as many blacks in this country as there are whites. And, on the other side, matching the physical appearance of the actor with that of the character he's playing is important to an audience's understanding and enjoyment of a play. In my view, that benefit, together with the principle that producers and other creative persons should have maximum freedom from government restrictions in deciding what to present to their audience, outweighs the cost to those minority actors who may occasionally lose an opportunity to play someone of a different race. Indeed, it seems to me that freedom of expression requires no less.

Response on Affirmative Action-BECKER

What a rich set of comments on an extremely controversial and difficult issue! I will not try to do justice to all of them, but I will make a few responses. I argued that affirmative action is less costly to society than many other special interest programs. So I do not understand the criticism of me on this issue. I agree that most of the diversity arguments about affirmative action are worth little. Diversity arguments were used in the past by Ivy League universities to keep down the number of Jews, and are now used to keep down the number of Asian Americans. A diligent student can learn from any good teacher, no matter his or her background. For example, Jewish students are better off with excellent non-Jewish teachers, sometimes even if they are anti-Jewish, than with mediocre Jewish ones. I believe the same conclusion applies to others. I believe a major difficulty is in distinguishing affirmative action from anti-discrimination behavior. Otherwise, in the absence of legislation requiring quotas or something similar, I would allow competition to determine the employment and admission policies by firms and schools. If the top 10% of each school were comparable, students from the lower quality schools would perform as well at universities as students at good schools. But they do not. I agree that it would be valuable to have more data on performance both in and after schooling of students from various groups. But I am certain I am right that the bad performance of affirmative action students in law schools is not special to law schools. It is pervasive on all campuses in most departments and professional schools. I agree with the references to Tom Sowell's excellent work on affirmative action around the world. He shows the many pernicious effects not only in the West but also in many other cultures. My argument about the harmful effects of using affirmative action to affect the quality of colleges attended by minority students of different abilities was one I first saw in an early article by Sowell. I do agree that affirmative action can discourage working hard. Advancement should not be made too easy or too hard. If it is too easy, beneficiaries tend to loaf; if it is too hard, sometimes they give up- see Glenn Loury’s work on some of this. I have no problem with looking harder for qualified applicants who might be overlooked, even if one can call this a very weak form of affirmative action. But surely it is radically different than advancing persons without sufficient qualifications. I indicated that perhaps legacies were overused, but I gave a rationale why they could be consistent up to a point with improving the long run quality of a university. , I would not blame a university for using affirmative action if it received larger foundation or government grants when they used affirmative action toward say African-American students. I would, however, blame the foundation, private or public, for using this criterion. I should add that I also oppose affirmative action for students from rural areas, etc. Nothing I said on affirmative action should be construed as applying only to groups defined by race gender, ethnicity, etc. I do not believe it is correct that Europe does not use affirmative action. For example, I believe Norway requires a minimal fraction of cabinet members to be women, and there are many other examples of affirmative action in Great Britain and other European nations. I was not complacent about the disadvantages that many minority students suffer from. That is why I support head start programs and the like. But I do believe it is a mistake to confuse even expensive programs that try to bring various minority and other groups up to satisfactory levels with using lower standards to evaluate them. I agree that in situations without market-clearing prices, as in some admission policies, there would be excess demand or supply that is an invitation to discrimination, segregation, and other bad things. That is one of the advantages of the price system that is seldom fully appreciated. For a discussion of some aspects of this issue with regard to schools and neighborhoods, see my book with Kevin Murphy, Social Economics. Corey takes it on the chin a lot, and I disagree with much of what he says. But I am very happy that he is an active participant in the discussions. I like having my views challenged (as well as defended!). So Corey, keep being involved! The same goes for Palooka and others. Posner and I intentionally take controversial subjects where there is considerable disagreement, so we expect disagreement. I hope the discussion stays tough but remains for the most part well-mannered.

On Affirmative Action-BECKER

Arguments about affirmative action, and its offshoots, diversity and quotas, bring out almost as much passion as arguments over abortion. Passion usually replaces reasoned analysis, so I will try to discuss as objectively as I can why I oppose practically all the major forms of affirmative action in place now at universities, the political sector, and businesses in the United States, Western Europe, and many other countries in all regions of the world. Let me say at the outset that I view affirmative action programs as mainly catering to special interest groups, in the same way as quotas on imports of agricultural goods cater to domestic farming interests. To be sure, affirmative action programs are defended with attractive language, such as that they are designed to offset the harm of past discrimination, or that they are simply trying to level the playing field for persons of different races, genders, or ethnicities. But all special interests programs are typically defended with nice-sounding language, such as that agricultural support is necessary to preserve the rural way of life, or that American ownership of energy resources is necessary for national security reasons, or that subsidies to small businesses is necessary to prevent predatory actions by large companies. I also want to stress that though I oppose affirmative actions, I believe that many other special interest programs, such as various aspects of the social security system, subsidies to agriculture, restrictions on immigration of skilled workers, and the presently developed tort system, do far more economic and social damage than does affirmative action. Most affirmative action programs, disguised or openly, use lower standards for African Americans and members of various other minority groups than for white males in determining whether they are promoted to higher level jobs in private business or government, admitted to better universities, and in other situations. Universities have openly used affirmative action by lowering substantially the acceptable SAT score for African Americans (and certain other groups) seeking admission compared to the scores required for whites or Asians. A disguised way, adopted by some states, is to admit applicants to state universities and colleges if they rank in the top 10 per cent of their high school class. This is disguised affirmative action because schools with favored minority groups typically have much worse students than other schools, so it is considerably easier to rank in the top 10 per cent of the lower quality mainly minority schools. It is obvious why affirmative action may hurt members of the majority group who are denied promotions or admission to various colleges, even though their records are better than many minorities accepted. But why is it bad for a country like the United States to do this, and often also for the minority groups gaining these privileges? My belief is that affirmative action is bad for any country that aspires to be a meritocracy, as the United States does, despite past slavery and discrimination that are terrible violations of this aspiration. The case for a meritocracy is that achievements based on merit produces the most dynamic, innovative, and flexible economy and social structure. Encouraging promotion or admission of less qualified applicants because of their race, gender, or other characteristics, clearly violates this principle, and produces a less progressive economy, and a distorted social structure. The appeal of a meritocracy explains why one can, as I do, strongly oppose both affirmative action, and discrimination against African Americans, women, and various other groups that have suffered discrimination in employment and in admissions to schools and colleges. While affirmative action programs give advantages to various minorities that are not justified by qualifications, discrimination does the opposite, and gives advantages to the majority that exceed their skills and qualifications. (See my The Economics of Discrimination, University of Chicago Press, for a systematic discussion of discrimination theory and measurement.) Unfortunately, laws opposing discrimination against various minorities often evolve into affirmative action laws, where the test of discrimination is not whether better-qualified minorities are passed over for jobs and promotions, but whether firms and universities have a sufficient number of members of designated minorities. Political pressure also has extended discrimination laws to groups that have suffered little in the past from discrimination, such as older workers. It is hard to sympathize from a discrimination viewpoint with older workers since they typically earn much more and have much lower unemployment rates than young workers, they easily qualify for decent disability income, and they can retire relatively early to receive taxpayer-supported retirement and medical benefits. Affirmative action is often justified as making up to African Americans, American Indians, and some other groups for the terrible discrimination and treatment they received in the past. Some affirmative action advocates argue that giving preference to minority applicants at colleges is no different from legacies-that is, giving preferences to children of alumni. Perhaps legacies have been overused, and their use is declining at the top universities, but the objective case for them is that this makes for more loyal and generous alumni. In addition, a good school record of a relative may be a useful predictor of an applicant’s school record. I am not trying to minimize the terrible treatment especially of African-Americans in the past. I am questioning whether affirmative action programs make up for past injustices. Clearly, some members of favored groups benefit from affirmative action, but others are hurt in direct and not so direct ways. To consider a direct way, many companies try to avoid hiring minorities favored by affirmative action because they realize they may face lawsuits in the future if they do not promote them, even when the promotions are not justified. Their refusal to hire because of affirmative action pressures later on makes them subject to anti-discrimination legislation, which is one way that laws against discrimination evolves into affirmative action. A more subtle way that affirmative action harms many members of the very groups they are trying to promote is illustrated by admissions to college. If lower admission standards are used to admit African Americans or other groups, then good colleges would accept average minority students, good minority students would be accepted by very good colleges, and quite good students would be accepted by the most outstanding universities, like Harvard or Stanford. This means that at all these types of schools, the qualifications of minority students would on average be below those of other students. As a result, they tend to rank at the lower end of their classes, even when they are good students, because affirmative action makes them compete against even better students. Studies have shown that this simple implication of affirmative action applies to students at good law schools, where the average African American student ranks toward the lower end of their law school cohort. My observation of many colleges and universities is that this conclusion has general applicability well beyond law schools. It hardly helps self –esteem if one is a member of a group that typically ranks toward the bottom in performance at a university or on a job. When discrimination dominated affirmative action, an African American or female medical doctor would be better than average since they had to overcome artificial hurdles to get where they were. That was not a desirable situation because discrimination made it harder for these groups to get ahead, so fewer of them than was warranted by their abilities and skills managed to make it to medical school. However, now, minority doctors and other professionals are greeted suspiciously by many patients and customers who fear they got where they are only because they were subject to lower standards. That can hardly make someone feel good, and helps explain some of the segregation and defensiveness of minorities receiving affirmative action help at schools or on jobs. While opposing affirmative action, I do not advocate just letting the status quo operate without attempting to help groups that have suffered greatly in the past from discrimination. Employers, universities, and other organizations should make special efforts to find qualified members of minority groups, persons who might have been overlooked because of their poor family backgrounds or the bad schools they attended. By using this approach, one can spot some diamonds in the rough that would get overlooked. I know that the economics department at Chicago in recent years has been able to discover and help train some excellent economists from disadvantaged backgrounds by searching harder for them. Another attractive policy is to help disadvantaged children at early ages rather than using affirmative action when they apply for jobs or colleges. There is still controversy over how much and how durable is the gain from head start programs, although I believe that extra effort spent on these children at very young ages tends to yield a decent return in terms of later achievements. But it has been conclusively shown that efforts to educate and help in other ways when children are in their teens generally fail since by that time the children have fallen too far behind others of their age to be able to catch up. Put more technically, current human capital investments builds on past investments, so if past investments are inadequate, the current investments have low returns. My concluding comment is that affirmative action is too often confused with anti-discrimination action. I believe there should be vigorous prosecution of discrimination toward groups like African Americans that have suffered from substantial discrimination. I also support positive efforts to bring children from minority groups closer to the achievement levels of others. However, affirmative action, whether under the name of quotas or diversity, does more harm than good, even though it is not the worst form of interest group politics.

Affirmative Action--Posner's Comment

I have a slightly kindlier view of affirmative action than Becker does, though I agree with most of his points: specifically, that affirmative action harms the ablest beneficiaries of it by casting doubt on their ability; that it places many of them in situations in which they are bound to fail or cluster at the bottom because they have been admitted to a school or given a job that is above their level; and that remedial education is unlikely to be effective after early childhood. But there are three areas in which preferences that are often (though not necessarily correctly) described as affirmative action seems to me defensible: 1. Situations in which race, sex, ethnicity, etc. is a legitimate job qualification. An obvious case is casting a black man as Othello and a white woman as Desdemona in a performance of Othello. A subtler case is making sure that in a prison or jail the vast majority of whose inmates are black there are some black correctional officers in supervisory positions; this is important for alleviating racial tensions. (See my opinion in Wittmer v. Peters, 87 F.3d 916 (7th Cir. 1996).) I would go further and say that if an all-male prison wanted to hire just male guards, or an all-female prison just female guards, I would permit this, although the courts disagree. 2. Situations in which a private firm or other private entity practices affirmative action in response to customer preference or to ward off adverse legal action. A firm that sells primarily to blacks might want to give a preference to black applicants for sales positions or insist that its advertising agencies include black models in their advertisements for the firm's products. Similarly, if a firm fears that it will be sued for discriminating against blacks, it should be allowed to favor blacks in hiring in order to reduce its legal risks. These are situations in which affirmative action is prima facie efficient because it is being adopted voluntarily by a private, competitive institution, presumably as a profit-maximizing, cost-minimizing response to competitive pressures. (Of course not all private institutions are commercial, but the noncommercial ones, universities for example, do face competitive pressures and do need to economize.) I don't think government should interfere with such choices. This by the way is not to say that firms controlled by blacks, say, should be permitted to discriminate against whites. That would not be affirmative action, which refers instead to discrimination in favor of the group that controls the discriminator. 3. Situations in which the only beneficiaries of affirmative action are black. Most of my examples of affirmative action have involved blacks rather than women, Hispanics, etc. My reason for that choice is that realism requires recognition that blacks are, for whatever reason or combination of reasons, in far the worst position, so far as health, prosperity, educational achievement, intermarriage, and other measures of success and integration, of any other major group in American society. Women, Jews, Asians, and other traditional victims of discrimination or newcomers or outsiders have all advanced to positions of essential parity with male WASPs, but blacks have lagged badly in relative terms. A situation in which 12 percent of the population is lagging badly behind the rest of the population is not healthy. I don't think affirmative action for blacks does much to promote their integration and sense of belonging in this society, but it probably does a little (notwithstanding Becker's correct point about the negative effect of affirmative action on self-esteem). Without affirmative action, elite educational institutions and other elite institutions (probably including the officer corps of the military) would have virtually no blacks, and this would underscore the gulf in achievement in a dramatic way that would be potentially harmful to social peace. Colin Powell was a beneficiary of affirmative action and his well-deserved public success and prominence is probably good for black morale. Category 3 is perhaps the only "real" affirmative-action category. Such a classification would be consistent with Becker's treatment. What is unfortunate is that although the only real case for affirmative action (outside my first two categories) concerns blacks, naturally other groups, seeing the potential benefits of discrimination in their favor, have climbed on the affirmative action bandwagon, often with ludicrous results, notably in the case of white, well-to-do, accentless, fully integrated Americans of Hispanic ancestry. I well remember a conference I attended at which a law professor named Delgado advocated affirmative action for persons of color, among whom he counted himself. However, as if often true of persons of Spanish ancestry, his black hair crowned a very pale face. He was in fact the whitest person in the room, had no foreign accent, and by his presence had in effect converted "people of color" into a purely political category. So I would like to see affirmative action confined and diminished, but I would not press for its abolition. I especially would not favor judicial abolition in the name of equal protection of the laws. Not that a powerful legal case can't be made; but it seems odd that the courts should strain to intervene on the side of majority rights, since the majority should be able to protect its interests in the democratic political process, without having to run to the courts. In addition, it is doubtful that the courts could effectuate a ban on affirmative action. As Becker points out, states have tried and failed, since such a ban can be circumvented in a variety of ways, such as by reducing or eliminating the weight given to meritocratic criteria in selecting for colleges or jobs. One final point. Given my category 2 above, the problematic area of affirmative action is largely confined to government employment, public universities, public contracting, and other government activities. In many of those activities, personnel practices are not meritocratic, but political, nepotistic, or simply slack and inefficient because of lack of economic incentives. If criteria are not meritocratic to begin with, injecting affirmative action may not reduce efficiency. I infer that the aggregate social costs of affirmative action probably are not great--though neither are the benefits.

The Ten Commandments--Posner's Response to Comments

It is not easy to respond to 160 comments; I can only discuss a handful, concentrating on the recurrent ones. But I must begin with an apology to sports fans for confusing "Texas Cowboys" with "Dallas Cowboys." The monument on the Texas State Capitol grounds is to the state's cowboys, not to the football team. My profound ignorance of sports stands exposed, and in some quarters my Americanism will now be questioned. While I am being defensive, let me respond to the comment about "one of the quirkier Posner opinions of all time. Have you ever wondered what water skiing in Hawaii had to do with the establishment clause?" The opinion, Metzl v. Leininger, 57 F.3d 618 (7th Cir. 1995), is actually quite straightforward. The issue was whether Illinois had violated the establishment clause by making Good Friday a public school holiday. Christmas is of course a public school holiday, so the issue narrowed to whether there is a difference. The difference, which is important to the Supreme Court and so has to be to me as a judge whatever my personal views, is that Christmas has become so far secularized that making it a holiday is not widely interpreted as signifying governmental endorsement of religion or Christianity. Good Friday, it turns out, has not become secularized--except maybe in Hawaii, where it kicks off a spring holiday weekend. I emphasized in my posting that I was going to discuss the economics of the establishment clause, not the legalities, so I'm a little surprised at Professor Rubin's accusing me of trying to impose an economic understanding on the clause. There is a lively debate in the comments over the issue of "incorporation"--was the due process clause of the Fourteenth Amendment (ratified in 1868) intended to incorporate the Bill of Rights in the sense of making them applicable to the states? The historical evidence is conflicting, but the proposition seems so implausible on its face that I would require a much clearer showing of the historical understanding to be convinced. Apart from the textual objection--the Bill of Rights includes a due process clause, so what literal sense can it make to say that the due process clause in the Fourteenth Amendment incorporated that clause and everything else in the Bill of Rights? But worse is the assumption that everything that Congress is forbidden by the Bill of Rights to do makes sense to prohibit every state, city, and village to do. That is so mechanical, so insensitive to different responsibilities of different levels of government. But all that is water under the bridge, given that only Thomas among the current Justices questions the incorporation doctrine. The bulk of the comments concern two issues that were remarked only in passing in my posting. One of these concerns my allegedly "snide" reference to "Intelligent Design," the anti-evolution theory now gaining traction in the nation's schools (there was an article on this in the New York Times this morning). I said it was a thinly disguised version of Biblical inerrancy. That statement was inaccurate, because as was pointed out in one of the comments not all adherents to ID believe that God created the universe, man, etc. in the mannner described in the Bible. However, it clearly is a religious conception, because "intelligent" design implies a designer, and what would you call such a designer but "God"? However, even if it is not a form of fundamentalist religion, it doesn't, in my view, belong in school. It is one thing to note problems with Darwinism, and to discuss the interesting question whether any theory can be truly scientific if it cannot be supported or falsified by actual observations, but it is another to teach, as the IDers want to do, that there are these competing theories, evolution and ID. ID does not have the structure of a scientific theory, there is no evidence for it, and there is no way to obtain evidence for (or for that matter against) it. The other issue, peripheral to my posting but obviously not to the commenters, concerns school vouchers. There were many interesting comments, and it is an issue to which Becker and I should probably devote a future posting to. The place to begin in thinking about the issue is with the difference between the state's mandating and subsidizing a service, on the one hand, and providing the service itself, on the other hand. The government can require that children be vaccinated and pay for their vaccination without manufacturing vaccines. Similarly, it can require that children attend school and pay for their schooling without operating schools, something it doesn't seem to be particularly good at; politics and teachers' unions drive up costs and drive down quality. The government would have to impose minimum standards on all voucher-supported schools, as it does now on private schools, but that is different from ownership and control. The government used to regulate railroad rates, but, unlike the practice in many other countries, it did not own the railroads. A voucher system is a first step toward privatizing education. Means-tested voucher entitlements would enable parents to select a school even if they had no private means. Many rich people would continue to send their kids to fancier schools than vouchers would pay for, but that would be no different than under the current system of public and private education. To return to the subject of my posting, I think it would be a great mistake to confine vouchers to secular schools, whether public or private. Catholic schools in this country have a good record and provide a type of education that is highly suitable for some children. Most of the education provided in Catholic schools is secular, and the amount of the voucher could be limited to the secular component.

Response to Comment on the State and Religion-BECKER

Not many comments, so my task is much easier than Posner's. However, the comments are of high quality even though I disagree with most of them. I am surprised by the claim-especially given who wrote it- that competition among religions might lead to a "race to the bottom". Why should that be any truer for religion than for competition among cars or telecommunication companies? What is known is that competition among religions increases the degree of religiosity (measured in various ways), and that more religious persons are more law-abiding, more honest, and so forth. However, it has been difficult to determine whether religions improve behavior rather than that more law-abiding and honest families are more likely to be religious. The little good evidence on this suggests some causation from religion to better behavior. Several persons misunderstood me on one major point, and I apologize if I did not make myself clear. When I speak about free competition and a level playing field among religions, I was not simply referring to government monetary subsidies. To take the example provided in one comment, it would violate the concept of free competition if the government only allowed Catholics to vote. Free competition and level playing field should apply to all areas of government involvement, such as who votes, who can run newspapers, who can set up denominational schools, who can open churches, etc. A closely related misunderstanding is that I have never advocated competition among religions, newspapers, or anything else, solely on a mechanical notion of "efficiency". The case for competition is that it better satisfies and influences people’s preferences-in effect, that it gives them greater choice. This case for competition applies just as strongly to religions, political parties, and other non-material activities as to the markets for clothing or computers. Someone questioned whether the Constitution prevents the establishment of an official church because of the desire to allow competition among religions. I do believe that was a crucial consideration. For support, one only need read Thomas Jefferson's Bill for Establishing Religious Freedom in the State of Virginia. Much of what he says there in making the case for religious freedom is best interpreted as showing the advantages of allowing different religions to compete for members on a level playing field. The Constitution also outlaws monopoly in a few other areas as well. The first of the Bill of Rights states that "Congress shall make no law respecting an establishment of religion…or abridging the freedom of speech, or of the press". These are all arguments against monopoly and for free entry into the print world and the world of ideas as well as religion. Free entry is really all that competition means. One would not expect a blanket condemnation of monopoly because the founders might well have expected cases of "natural" monopoly;that is, cases where competition would not be efficient or feasible. I accept the criticism that several of the Ten Commandments might not now be accepted by everyone. Still, my main point is surely right, that allowing a display of these Commandments on public property is minor compared so many other activities that governments engage in. I definitely agree that property owned by religious institutions should not be tax-exempt. My reason is not that this discriminates against atheistic groups since they can have non-profit organizations that would also be tax-exempt. My main reason is that I am generally doubtful about the tax-exempt status for all non-profits, including, but not confined, to religious groups. This is a bit off the topic, but I cannot let pass the claim that vouchers would drain the good students from public schools, and would leave the students who remain there much worse off. The true situation illustrates how competition works. Schools that lose students to better schools would be under great pressure from parents and others to improve themselves. They would tend to get new principals, change their teaching, etc. This is not just theory, for it is backed up in the studies by Carolyn Hoxby of Harvard and others.

The Ten Commandments Cases--Posner

In two much-anticipated decisions rendered by the Supreme Court just before it recessed for the summer--Van Orden v. Perry and McCreary County v. American Civil Liberties Union of Kentucky--the Court was asked to decide whether the display of the Ten Commandments on public property is a forbidden "establishment" of religion. The First Amendment forbids Congress to make any law respecting an establishment of religion--that is, it may not create an established church, such as the Church of England, or the Roman Catholic Church in Italy. The displays at issue in the Court's two cases were on state, not federal, property; but the Fourteenth Amendment has been interpreted, questionably but conclusively, to make most of the provisions of the Bill of Rights, including the establishment clause of the First Amendment, applicable to state and local action. In the Van Orden case, the Ten Commandments were inscribed on a monument on the grounds of the Texas State Capitol. The grounds were sprinkled with monuments of diverse character, including monuments dedicated to the Texas Rangers, the Texas Cowboys (the football team), the Heroes of the Alamo, Volunteer Firemen, and Confederate Veterans. The Ten Commandments monument had been given to the state 40 years earlier by the Fraternal Order of Eagles, at the suggestion of Cecil B. DeMille, who was promoting his movie The Ten Commandments; and during this long interval, no one had complained about the monument until Van Orden. The Court held that the display did not violate the establishment clause. But in the other case, McCreary, where the Ten Commandments were displayed in a Kentucky courthouse, a differently composed majority of the Court held that the display did violate the clause. I want to begin by considering from the ground up as it were, as a speculative exercise unrelated to the legalities, why a legislature should be forbidden to establish a church. That is, suppose a large majority of citizens belong to a particular sect which they naturally believe has the truest understanding of religion. What more natural than that they should try to embody their belief in law by pressing for legislation that will "establish" their sect as the "official" religion of the state or nation by imposing a tax to finance it? Of course the people who do not belong to the sect will not want to pay such a tax, but many government expenditures offend numerous citizens--think of all the people who oppose the war in Iraq; they nevertheless are taxed to support it. It might be argued that being forced to support a religion one doesn't believe in is peculiarly offensive. But, if so, a law to establish that religion would be unlikely to be enacted. Minorities with strong feelings about an issue regularly prevail in legislative battles--think of all the laws that are passed forbidding discrimination against various minorities. In fact, there is such religious pluralism in the United States that probably in no state except Utah could a law be passed establishing a particular religious sect even if the establishment clause had never been held applicable to the states. Almost all establishment-clause cases involve efforts to "establish" religion in general (versus nonbelief), monotheism, Judeo-Christian monotheism, or Christianity. These efforts take such forms as making time for voluntary prayer in public schools, encouraging public school instruction in "intelligent design," providing public funds for secular education in religious (mainly Catholic) schools or for the display of the creche during Christmas, or, as in the two recent cases, displaying religious materials on public property, usually without cost to the public--it is easy enough to obtain donations of such materials, as in the case of the Ten Commandments monument given Texas by the Fraternal Order of Eagles at the suggestion of DeMille. Some of these efforts are held to violate the establishment clause, others not; there is no discernible pattern or crisp legal standard. From a purely economic standpoint, it seems to me that the case for permitting such "establishments" should turn on whether the likely effect is merely to offset some subsidy for secular activities. Obviously the fact that the public schools are "free" to the parents, being supported out of taxes, places religious and other private schools at an arbitrary disadvantage, so there is nothing wrong (remember I am speaking only of the economics of the question) with providing a comparable subsidy so that parental choice will not be distorted. The subsidy of secular activities is more subtle in the case of public display, but it is nonetheless present. Suppose that at Christmas time the public grounds display only secular aspects of Christmas, such as Santa Claus, and refuse to display a creche; then religious Christians are denied the same free opportunity to advertise, and enjoy seeing, their version of Christmas. Similarly, suppose the Texas State Capitol welcomed a large variety of secular displays (as indeed it does) on its capacious grounds, but refused to permit a religious display; this would give a cost advantage to secular displays because they would be free both to the sponsors and to the viewers. Some people are offended by any religious display; but given the nation's religiosity, probably more people are offended by the banning of all religious displays from public property, which they interpret as sending a message of hostility to religion in general or to the dominant Judeo-Christian monotheism in particular. The case against requiring the teaching of "intelligent design," a thinly disguised version of Biblical inerrancy, is stronger because it confuses religion with science and weakens Americans' already dangerously weak scientific understanding. An individual is entitled to reject science, but he should be taught it, and the teaching of science is impaired if religious dogma is treated as a form of science. If secular activities are not being subsidized, I don't think there is a strong economic case for religious subsidies any more than for other private goods. It is possible to argue, however, that subsidizing displays of the Ten Commandments does create value in an uncontroversial sense, because they are primarily understood nowadays as an ethical rather than religious statement. The government is permitted to "propagandize" on behalf of uncontroversial moral principles, and the Ten Commandments contain arresting statements of some of those principles, such as "Thou shalt not kill." The complication is that some of the commandments are sectarian, such as the injunction to worship only one God. Although atheists are in the forefront of litigation against alleged establishments of religion, there is a powerful argument first made by David Hume and seemingly illustrated by the state of religion in Western Europe that an established church weakens rather than strengthens religious belief, and, a closely related point, that rather than fomenting religious strife (a concern of the framers of the Constitution) it induces religious apathy. Hume thought that religious officials paid by government would act like other civil servants, a group not known for zealotry, because they would have no pecuniary incentive to make coverts or maximize church attendance. That is a good economic argument: if you are paid a salary that is independent of your output, you will not be motivated to work beyond the minimum requirements of the job. A less obvious point is that a public subsidy of a particular church will make it harder for other churches to compete. The result will be less religious variety than if the competitive playing field were equal. A reduction in product variety (with no reduction in cost) will reduce demand for the product. This point is less compelling than Hume's, because of offsetting considerations. The subsidy may stimulate demand for the established church by reducing the quality-adjusted cost of attending it--suppose the subsidy is used to build magnificent cathedrals or hire outstanding organists and choirs. The increased demand for the services of the established church may offset the lack of religious variety. Moreover, if the subsidy causes the officials of the established church to become indolent, this may offset its cost advantage and facilitate the competition of other sects. Empirically, however, it does seem that established churches do not increase, and, judging from the experience of most though not all European countries (Poland is a major exception), probably diminish religiosity, consistent with Hume's analysis. However, his analysis is probably inapplicable to the attenuated forms of establishment that are all that are feasible in a religiously pluralistic society such as that of the United States (of course it may be pluralistic in part for Hume's reason). A public display of the Ten Commandments is a far cry from a state-salaried minister, so far as the impact of public support of religion on proselytizing is concerned.

Comment on the State and Religion-BECKER

I will follow Posner and try to discuss the general principles concerning the State and religion rather than the details of these Ten Commandment cases. To me, the overriding reason why the State should not make any law respecting the establishment of religion is the case for competition and against monopoly. Competition allows for entry of producers, including new religious ideologies, such as scientology and bahaism, or new forms of atheism, that cater better to the preferences and needs of people, be they spiritual needs or materialistic ones. Monopolies restrict entry, and hence preclude the entrance of producers with new ideas, including religious ones. Throughout history, religions have tried to use the State to give them a privileged and protected position, and in this regard have been no different than telephone companies and airlines that have used government power to keep out competition. This use of the State to foster particular religions is found in many Islamic societies that subsidize teachings and practices of Islam, the Israeli State that subsidizes Judaism, or some Christian nations that use taxes to pay the ministers' salaries. As Posner recognizes, many other groups also succeed in getting the State to support their activities, but two wrongs do not make a right. Governments should not support particular religions, or other groups that feed off the State. Competition usually increases the demand for a product compared to monopoly. As Posner indicates, this is one of the arguments Hume made against State-supported religion. Adam Smith in the Wealth of Nations made a similar argument, and a quantitative study by Lawrence Iannoccone tested Smith's claim. He found some support for the conclusion that religions flourished more when competition among religions is greater. The US stands out in this regard, for it has several thousand "different" religions competing for members, and it is more religious than other wealthy countries. However, fundamentalist Islamic countries and Christian countries like Ireland and Poland do actively support a particular religion, and they also have relatively high participation in religious activities. So they are counterexamples to the Hume-Smith-Iannoccone thesis. Moreover, as Posner indicates, large state subsidies to one particular religion could lead to greater demand for religion than in an unsubsidized competitive environment. That is why I believe the case for free competition among religions comes mainly from competition providing opportunities for new religious belief systems, including atheistic beliefs, to cater better to people’s desires. To repeat, the case for competition among religions is the same as the case for competition in other industries: to allow entrants with different ideas and points of view to compete for consumer time, money, and other support without any government favoritism. I support government-financed school vouchers for various reasons that I have discussed elsewhere. That includes support for vouchers for religious denominated schools, as long as they are available on equal terms to all groups, including explicitly atheistic ones. The State does have the right to exert control over the curriculums of schools taking government aid in one form or another. This control can include sharp limits on how much time a school can spend teaching religious doctrines, including doctrines against organized religions. I am not competent to discuss the legal aspects of the two Ten Commandment cases, but where does this analysis of the case for competition and a level playing field among religious doctrines come out on the issues raised by these cases? As Posner indicates, most of the Commandments deal with ethical issues that would be supported by all groups, and are not really controversial. Those that are sectarian--say to worship only one God--can be opposed on grounds that they support certain religions against atheistic groups, or even other religions. Consequently, I believe the principle of a level playing field argues against allowing religious displays, and many of the other displays on public property mentioned by Posner and in the Court's decisions. Still, these displays, including the Ten Commandments, are far more innocuous then the many laws that give monopoly powers to telecommunication companies, domestic airlines, farm products, and various other industries. So relative to the harm caused by laws that rig the playing field in these industries, the extensive agitation over the display of the Ten Commandments seems like a tempest in a teapot.