[Originally published at LewRockwell.com]
The new religious freedom controversy in Indiana reminds us that discrimination and exclusion are foundational aspects of private property. Without the right to exclude, a right to private property does not exist, since forced inclusion implies coerced action and accommodation under the threat of violence from the regulating state agency in question. The decision to exclude is always based on some type of discrimination, although the type of discrimination can run the gamut from “you’re banned from my store because you groped customers” to “I don’t serve your (racial) kind.” In practice, the excluded party must then seek similar or substitute services elsewhere. Since discrimination of various types must always exist if any measure of private-property rights are to be respected, those who wish to expand the options for those who face discrimination should look to greater ease and freedom in providing more diverse choices for everyone in the marketplace. State efforts to restrict entry by entrepreneurs into markets through regulation and prohibition result in less choice and more monopolistic power for the incumbent firms, increasing the effect of the discrimination on the consumer.
Additionally, the effects of discrimination are magnified when “public” or government property or services are an important factor in the transaction. Government agencies, as monopolists by definition, present a much more grave challenge to groups that face discrimination. We have been told that people who refuse to bake cakes for same-sex couples present some sort of grave threat to civilization (as if the customer could not easily find a willing baker elsewhere), but when faced with no choice but to submit to the local monopolist (i.e., city government) the parties that face discrimination have no alternatives.
To illustrate this, we can look to past cases of government-sector discrimination to illustrate this contrast with private-sector discrimination. The now-infamous Sleepy Lagoon murder case provides a helpful case study, and is of particular interest to me given my own family history within the community at the time.
When my mother was born into a Mexican-American family in Los Angeles in the 1940s, she was born just a few years after the show trial that followed the murder, and in which 12 suspects were quickly tried and convicted of crimes related to the murder of Jose Diaz:
On August 2nd  Jose Diaz was found near what had come to be known as the “Sleepy Lagoon.” He was rushed to a hospital where he died from massive head trauma as well as stabbings. After his body was found, there was a huge police sweep over the whole County, in which over 300 male youths were arrested…twenty-four youths were indicted on charges of conspiracy to commit murder, as well as assault with a deadly weapon.
As part of an effort to win a conviction, the Los Angeles County Sheriff’s Department then published a document titled simply “Statistics” that explained the necessity of more harsh enforcement of laws against the Mexican-American population in Los Angeles.
The prosecution in the ensuing murder trial put the entire Mexican American community on trial by identifying all “Mexicans” as criminals and gangsters. The Foreign Relations Bureau of the Los Angeles Sheriff’s Department circulated a report asserting that criminality was an inherent racial trait of Mexicans and thus of Mexican Americans. The report argued that Mexican Americans were partially Indian by descent, Indians were originally “Orientals,” and “Orientals” had no regard for the value of life.
The report’s text states:
Many of these young gangsters have comparatively good jobs, so economics is not a determining factor in their case. In fact, as mentioned above, economics as well as some of the other features are contributing factors, but basically it is biological—one cannot change the spots of a leopard.
The Caucasion [sic], especially the Anglo-Saxon, when engaged in fighting, particularly among youths, resort to fistcuff [sic] and may at times kick each other, which is considered unsportive, but this Mexican element considers all that to be a sign of weakness, and all he knows and feels is a desire to use a knife or some lethal weapon. In other words, his desire is to kill, or at least let blood. That is why it is difficult for the Anglo-Saxon to understand the psychology of the Indian or the Latin to understand the psychology of the Anglo-Saxon or those from Northern Europe. When there is added to this inborn characteristic that has come down through the ages—the use of liquor, then we certainly have crimes of violence.
Ed. Duran Ayres, the author of the report, was employed as an expert witness for the prosecution in the case, apparently as part of an effort to show that the defendants were statistically more likely to be murderers than an ordinary person.
Tax-Funded Discrimination vs. Private-Sector Discrimination
Notable in this is the fact that these views were being promulgated by a government agency for the express purpose of justifying the use of coercive force against persons, and — less explicitly — disregard for due process. All the government agents involved, from the presiding judge, to Duran, to the cop on the street, were paid with taxpayer money. Moreover, these agents exercised a monopoly of force within their jurisdiction. All residents within the jurisdiction, whether Anglo, Mexican, or otherwise, were compelled to financially support the courts and the Sheriff’s Department.
Many scholars, nevertheless, have studied the trial as a case study of ethnic bias at the time within the private sector, with a focus on the local media and the population at large which allegedly demanded the type of show trial that the defendants were given.
Certainly, the press engaged in many outrageous calumnies, regularly referring to the as-yet-not-convicted defendants as “hoodlums” “Mexican goon squads” and so on. Also, there is no doubt that many within the general population were happy to see more Mexican-Americans locked up, but it remains abundantly unclear that a majority of Angelenos at the time subscribed to the Sheriff’s department’s “scientific” theories about certain ethnic groups.
Moreover, of notable importance is the fact that the media, like all private institutions, and all private citizens, does not have the legal authority to arrest, detain, or execute people. Nor do private citizens who disagree with the local media’s positions or private citizen’s beliefs need support such things financially.
Government agencies, on the other hand, do have the legal authority to arrest, detain, and execute people, and they have the power to force all residents within their jurisdiction to support government institutions financially.
Those private citizens who do use coercion without due process are correctly deemed “criminals,” “thieves,” or “murderers” who must themselves be subject to the local monopolist of law enforcement.
Here we see the fundamental difference between public discrimination and private discrimination. With private discrimination, the person who faces discrimination (for whatever reason, be it ugliness, poor fashion sense, past conflict with the property owner, or membership in some ethnic group) has the freedom to pursue services elsewhere. On the other hand, the party that faces government discrimination (whether based on religious views, political incorrectness, wage rates paid, or membership in some ethnic or racial group) has no choice to seek a competitor or to even stop financially supporting the discriminating agency. As a monopolist, the state agency, necessarily prohibits choice for the discriminated-against party.
So, naturally, we can see how private discrimination is in its basic constitution quite different from government discrimination. For example, in Los Angeles in the 1940s — where it was apparently official policy that Mexican-Americans were to be regarded as especially criminal-minded — were my Mexican-American grandparents and their children more threatened by a baker who might refuse them a cake, or did the real danger lie with the Sheriff’s department? Obviously, the threat posed by the County of Los Angeles was much, much greater than any “threat” posed by any private merchant, in part because the government agency employs coercion, but also because private-sector firms, unless they enjoy monopoly powers bestowed by government regulators, are forced to compete with other similar firms in the marketplace. In other words, it’s one thing when your grocer thinks you are a blood-thirsty mestizo. It’s another thing entirely when your local police force thinks the same.
My grandfather (second from left) with relatives in the 1940s in East Los Angeles
The Reduce the Effects of Discrimination, Reduce Monopoly Power
The answer to the problem of discrimination in both bases is to seek to enhance discrimination or at least weaken monopolist power as much as possible. In the case of government agencies, the proper first step would be to decentralize, and to break jurisdictions into smaller pieces. By the 1940s, Los Angeles County was already a large operation by the standards of the day. There is no reason that citizens could not have been given greater choice within the area by limiting local governments to much smaller jurisdictions — jurisdictions that were more likely to reflect the values and ethnic make-up of each community. (One cannot, of course, ignore the role of basic ideology in this. A society that has no regard for private property and due process will not have a decent justice system, regardless of how the institutions are structured.) But other means could be employed as well, including options for third-party arbitration. And within the private sector, we must always be ready to condemn efforts on the part of both government and private agents to limit choice through government regulation.
Indeed, in the years before Sleepy Lagoon, California had employed government regulation to put Japanese-Americans at an economic disadvantage and to limit their ability to competeagainst white merchants:
In California during the late nineteenth and early twentieth century, anti-Japanese sentiment ran high, in spite of the fact that they never comprised more than 3 percent of the population. To discourage Japanese immigration to California and to curb the wealth of the immigrants themselves, a large number of major employers agreed among themselves to not hire any Japanese workers. At the same time, politicians at the state legislature passed laws prohibiting Japanese immigrants from working in various occupations. In response, both immigrant and native-born Japanese worked around these laws and employment bans by focusing on industries that were ignored by much of the population due to the hard work required and the slim profit margins involved. Japanese workers and entrepreneurs began to dominate the truck farming and flower and nursery industries. The Japanese, who developed more efficient ways of farming and getting crops to market soon began to put white farmers out of business. White Californians responded with alien land laws in 1913 and 1920 which banned the sale of land to foreign-born Japanese and also prohibited leasing land to the same for more than three years. The Japanese merely responded by putting the land deals in the names of their native-born children, and the cycle continued, until Roosevelt solved many of the whites’ problems by simply locking the Japanese in concentration camps.
If one wishes to really fight private-sector discrimination and to ensure that no community or ethnic group is forced to submit to terms dictated by any monopolist, it is government regulation that must be opposed, as such regulations restrict choice and impose partial or complete lack of choice for consumers. The higher the bar is placed for entry into the marketplace by regulators, the less choice and competition there will be. With government monopolists, we have a much tougher row to hoe, as most people today accept that government agencies should enjoy a monopoly on a variety of industries, including law enforcement. The solution lies in first accepting that discrimination imposed by government agents is far more dangerous and destructive than anything a private sector actor in an unhampered market could attempt. And finally, it is important to remember that the key factor in understanding the degree to which discrimination can be harmful lies not in the discrimination itself, but in the extent to which the discriminating party enjoys a monopoly over goods and services with the industry in question.