In its preoccupation with quotas, set-asides, forced busing, and other forms of social engineering, the contemporary civil rights establishment has ignored one of the most pervasive and debilitating deprivations of civil rights today—state-imposed barriers to entrepreneurial opportunities.
Such barriers take the forms of state-imposed business monopolies and occupational licensing laws. In many cases, such laws are an enduring relic of the Jim Crow era. Though they are no longer overtly racist, their effects are largely the same: they exclude from competition those outside the economic mainstream, primarily blacks and other minorities.
The quest to eradicate artificial barriers to economic opportunities occupied a central focus of the civil rights movement between 1866 and 1964, and was a principal motivation for civil rights legislation both at the beginning and end of that period. The movement’s leaders—from William Lloyd Garrison and Frederick Douglass to Booker T. Washington and Martin Luther King—recognized that such barriers were inconsistent with the natural law foundations of America’s doctrinal commitment to civil rights.
But during the past 25 years, the civil rights movement has shifted its focus from equality of opportunity to forced equality in result. In the process, it has transformed the concept of civil rights from those fundamental natural rights we all share equally as Americans into special burdens for some and benefits for others.
What these revisionists have forgotten is that the civil rights movement has always been about securing for individuals the right to control their own destinies. By advocating government- coerced proportional representation instead of the market, the civil rights establishment denigrates the very mechanism by which countless generations have earned a share of the American Dream. In effect, this establishment is consigning a vast portion of its purported constituency to a perpetual state of dependency and despair.
A reinvigorated civil rights movement, drawing upon the lessons of history and the natural law principles of fundamental individual rights and equality under the law, ought to dedicate itself to eradicating those barriers that artificially separate individuals from opportunities. In so doing, such a movement will eliminate the final impediments to a real, lasting emancipation.
These issues are not new. Following the Civil War and the abolition of slavery, plantation owners were .faced with a desperate labor shortage. The intense competition for labor resulted in a 600 per cent increase in crop shares for black tenant workers between 1865 and 1875.
Southern leaders tried persuasion and peer pressure to limit black wages and opportunities, but such efforts were insufficient to counteract market forces. Whereupon, the former slaveholders turned to the coercive apparatus of the state to accomplish what they could not in a free market. “We must have a black code,” Southern theorist George Fitzhugh urged in 1868, to restore the natural order of “masters and slaves.” He explained, “We do not mean by slavery such as that which has been recently abolished, but some sort of subordination of the inferior race that will compel them to labor, whilst it protects their rights and provides for their wants.” Couched in these benevolent terms, Fitzhugh’s prescription was surely the earliest form of what has come to be known in recent years as “benign discrimination,” the implicit premises of which reveal it, like all forms of racism, to be anything but benign.
Proceeding from these mutually reinforcing premises of inferiority and paternalism, Southern legislatures moved swiftly to restore as closely as practicable the feudal society that existed before the war. Eight states passed Black Codes between 1865 and 1867, extinguishing labor opportunities through a variety of legal restrictions.
Typical of the Codes was South Carolina’s requirement that any “person of color” must obtain a license to engage in the “business of an artisan, mechanic, or shop-keeper, or any other trade, employment or business.” The licenses cost $100, certainly a staggering sum for an ex-slave in 1865. Moreover, the licenses were valid only for one year; they required a showing of skill, fitness, good moral character, and an existing practice or apprenticeship; and they could be revoked upon any complaint of abuse. Thus was a servile labor supply ensured, quarantined from competitive market influences by state action.
Recognizing that these state laws were nullifying the gains of abolition, the radical Repub licans in Congress acted to protect the economic rights of the freed slaves. They passed the Civil Rights Act of 1866, which established that all citizens “have the same right [to] make and enforce contracts, . . . to inherit, purchase, lease, sell, hold, and convey real and personal property, and to full and equal benefit of all laws [for] the security of persons and property, . . . any law . . . to the contrary notwithstanding.”
This economic bill of rights was vetoed by President Andrew Johnson, but Congress overrode his veto. Johnson warned that the Act was unconstitutional since it purported to regulate state affairs, leading Congress to constitution-alize the Act through the 14th Amendment. In addition to guaranteeing “due process” and “equal protection” under law, the Amendment provided that “[n]o State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States”—such as those protected by the Civil Rights Act.
This great promise of the 14th Amendment was never fully realized, however. The massive corruption of the Grant Administration, the disputed election of 1876 which led to the removal of Federal troops from the South, and the death ‘of the great abolitionist leaders all contributed to the shift in national focus away from the plight of blacks in the South.
The Slaughter-House Cases
But the death knell for economic liberty as a component of civil rights was sounded by the Supreme Court in the Slaughter-House Cases in 1872, which read the “privileges or immunities” clause out of the 14th Amendment in much the same way as the equal protection clause was nullified by the Court in Plessy v. Ferguson twenty-four years ‘later. Plessy was eventually overturned in Brown v. Board of Education, while Slaughter-House remains on the books today—yet its renunciation of economic liberty is no less profound a violation of fundamental civil rights than was the pernicious “separate but equal” doctrine.
Slaughter-House involved a challenge to a Louisiana law that established a slaughterhouse monopoly and prohibited competition in that trade. The law was challenged by a group of butchers who asserted their liberty under the 14th Amendment to engage in a profession free from arbitrary or unequal state laws. But the Court upheld the law by a 5-4 decision that rendered the “privileges or immunities” clause a dead letter.
Justice Stephen J. Field denounced the decision, “for by it the fight of free labor, one of the most imprescriptible rights of man, is violated.” Another dissenter, Justice Noah H. Swayne, expressed the “hope that the consequences to follow may prove less serious and far- reaching than the minority fear they will be.” His fears proved prescient, however, as the Court’s abdication of its constitutional duty opened the floodgates for state regulation of economic activity so stifling and pervasive as to make the Black Codes seem mild by comparison.
Jim Crow Laws
Unencumbered by constitutional restraints, the Southern legislatures passed the Jim Crow laws, an elaborate and interwoven tapestry of social and economic restrictions that destroyed the ability of blacks to improve their condition. In particular, four principal varieties of laws were adopted to restrict mobility and frustrate competition. The so-called “contract enforcement” laws strictly limited the times during which laborers could seek new employment. Vagrancy laws discouraged mobility by making it unlawful to be unemployed. “Emigrant-agent” laws restricted the activities of labor recruiters. And “convict leasing” laws created a system of “debt peonage,” by which blacks who were imprisoned for debts were furnished to employers who would assume their obligations until the debts were repaid.
The Jim Crow laws thus represented a transparent device to assure a servile and inexpensive supply of labor, relegating blacks to a separate, subordinate caste. The lesson of Jim Crow, as Professor Jennifer Roback concluded in her study of market interferences during that period, is that “government, not private individuals . . . must be restrained in order to allow disfavored minorities to make substantial economic progress.”
It took the better part of a century for the civil rights movement—holding tenaciously to the natural rights underpinnings of the traditional American civil rights vision—to convince the nation to make good on its basic commitment to equality under law.
A major thrust of the civil rights movement’s traditional program, from Booker T. Washington’s emphasis on economic self-sufficiency to the demands for equal opportunity following World War 11, was to gain for blacks the right to compete freely for their share of the American Dream. Morris Abram, former vice-chairman of the U.S. Commission on Civil Rights, explains that the movement’s leaders understood that “removing all barriers to the exercise of an individual’s ability to participate in a free market system is the best possible way to promote justice.” Such efforts reached their pinnacle in the golden decade for civil rights, spanning from the Brown decision in 1954 to the adoption of the Civil Rights Act of 1964.
But in some respects the movement did not go far enough. Laws that were racist either overtly or in their intent were struck down, but barriers to entrepreneurial opportunities that had the same effect remained in place—indeed, they proliferated dramatically. Traditionally, newcomers to America had been free to apply their skills and ingenuity to virtually any profession or business—a hallmark of America’s free market system. But for today’s “economic newcomers”—blacks, Hispanics, and immigrants—these traditional mechanisms for entry into the mainstream are often foreclosed by the state.
George Mason University economics professor Walter Williams explains that black handicaps resulting from centuries of slavery, followed by years of gross denials of constitutional rights, have been reinforced by government laws . . . that govern economic activity. The laws are not discriminatory in the sense that they are aimed specifically at blacks. But they are discriminatory in the sense that they deny full opportunity for the most disadvantaged Americans, among whom blacks are disproportionately represented.
Such economic regulations implicate civil rights in two ways. Where .they arbitrarily restrict an individual’s ability to engage in a business or vocation, they constitute an infringement of the fundamental individual liberty that is the essence of civil rights. And where they limit competition in the market to a certain number or group, they violate the principle of equality under the law.
More than ever before, government at every level is violating civil rights by erecting barriers to free participation in the market, denying to many outside the economic mainstream the ability to compete that is every American’s birthright. The two principal types of barriers are occupational licensing laws, the modern equivalent of those enacted in the Black Codes; and government- imposed business monopolies, successors to the type of monopoly upheld in the Slaughter-House Cases.
Occupational licensing laws regulate entry into a large number of occupations, covering fully l0 per cent of the labor force. California alone licenses 178 different occupations. Licensing laws are typically sought by members of the affected profession, ostensibly to protect public welfare and safety, but in reality to limit competition. Such laws often limit entry into occupations with only the most peripheral impact on public heath or safety, such as auctioneers, photographers, pool cleaners, and taxidermists.
And even where a legitimate justification may exist for some regulation, licensing laws are commonly crafted so broadly or arbitrarily as to go well beyond such objectives, thereby restricting supply rather than ensuring competency. Moreover, the laws are often enforced by the affected industry itself, with the coercive apparatus of the state at its disposal: using “grandfather clauses”—another favorite device of the Jim Crow era—to protect incumbents against the arbitrary new legal requirements.
These laws are devastating to blacks and other minorities. A case in point is licensing requirements for beauticians and cosmetologists in Missouri, recounted by Dr. Williams in The State Against Blacks. As a threshold requirement, the state requires 1,220 hours of formal training or 2,440 hours of apprenticeship under an approved cosmetologist. Thereafter, prospective beauticians and cosmetologists must pass both a practical and written examination. The latter tests not only knowledge related to the profession, but such esoteric concerns as the chemical composition of bones.
In a recent examination, Dr. Williams reports, black candidates passed the performance portion, demonstrating their competency to practice their profession, at the same rate as whites. As for the written component, however, blacks comprised only 3 per cent of those who passed but 21 per cent of those who failed. Thus, a vastly disproportionate number of black beauticians and cosmetologists were disqualified for no apparent reason from pursuing occupations for which they were demonstrably qualified. Similar deprivations of individual liberty are visited wherever an arbitrary licensing law stands m the path of business opportunities.
Likewise, state-imposed monopolies needlessly frustrate the ambitions of would-be entre preneurs in businesses running the gamut from hot-dog pushcarts to cable television companies. Perhaps the most flagrant species of such protectionist legislation is taxicab franchising, which in cities across the nation stifles opportunities to begin climbing the rungs of the economic ladder through a low-capital business.
A few examples illustrate this phenomenon. In Washington, D.C., the taxicab market has virtually open entry, with only safety and insurance requirements and a $25 annual fee required to start business. Accordingly, the market provides substantial entry-level business opportunities for blacks and immigrants, with the result that 70 per cent of all Washington cabs are owned by blacks.
But this is the exception to the rule. In New York City, for instance, a “medallion” is required to own a cab, and none have been issued since World War II. As a result, the “market” value of medallions has risen to $100,000—to-tally precluding taxicab ownership as a viable entry-level entrepreneurial opportunity. In Philadelphia, meanwhile, taxicab licenses are issued by the Public Utilities Commission for only $20—but only upon a showing of “public convenience and necessity,” which is routinely contested by industry lawyers retained solely for that purpose. Thus, the real cost of a transferable license on the market turns out to be approximately $20,000.
The impact of taxicab franchising on opportunities is staggering. While nearly two thousand blacks own cabs in Washington, for instance, only 14 blacks own cabs in Philadelphia. Instead, blacks in New York, Philadelphia, and most other cities work as employees for other people, thus diminishing prospects for economic advancement. Moreover, the artificial limits on market entry translate into higher prices and fewer cabs, the burdens of which are most heavily borne by ghetto consumers.
All of the interests asserted in defense of occupational licensing and state-imposed business monopolies can be served in ways far less devastating to individual opportunities. Consistent with a proper understanding of civil fights, governmental entities should be compelled to pursue less-harmful alternatives.
The failure of the civil rights establishment to confront these concerns presents a golden opportunity for advocates of individual liberty to recapture moral leadership in the realm of civil rights.
Methods of challenging barriers to economic liberty are limited only by the imaginations of their architects. One possibility is to press for a federal Economic Liberty Civil Rights Act that would forbid state and local governments from arbitrarily restricting entrepreneurial opportuni ties. Another is to challenge such barriers in the courts as violations of civil rights, with the ulti mate goal of erasing the Slaughter-House Cases from American jurisprudence and restoring judicial protection for economic liberty.
Other modern deprivations of civil rights also demand attention. The monopoly public educational system, for example, disparages educational liberty in a manner particularly devastating to minorities and the poor, who have no other alternatives. The vicious cycle of poverty and despair, fueled by our welfare system, is yet another example of government depriving individuals of the right to control their own destinies.
Advocates of individual liberty can refashion the terms of the civil rights debate by exposing these types of governmental programs and policies as deprivations of civil rights. Such an effort will restore vigor to the traditional meaning of civil rights—and the natural law principles undergirding those rights—upon which America’s moral claim is staked.
The author is an attorney with the U.S. Department of Justice, Civil Rights Division. The article is adapted from his forthcoming book, Changing Course: Civil Rights at the Crossroads (New Brunswick, N.J.: Transaction Books, 1988). The views expressed are those of the author and are not intended to reflect the views of the Justice Department.