Race Bias #26 - "The Racial Spoils System"

For some reason, the academic establishment is not terribly interested in studying the costs of affirmative action race quotas. But then, that is no surprise, because these programs must remain hidden from the majority in order to survive politically.

We are indebted to Governor Wilson, of California, for ordering his departments to calculate direct costs of governmental race preferences in his state. Most governments refuse to calculate these kinds of numbers.

I have reprinted below excerpts from an article in National Review Magazine by Tom McClintock, director of regulatory affairs for the Claremont Institute, citing those cost figures prepared by the State of California.

McClintock's conclusion is that direct costs to the taxpayers of California are $156 million. Throw in price increases extracted by minority contractors, and the costs increase to $363 million. The federal budget is more than 15 times the California Budget. Since the federal government has similar affirmative action race preferences, it is reasonable to assume that federal costs are 10 to 15 times larger than those of California, or in the range of $3 to $5 billion per year.

Add in the programs from the other 49 states and about 3000 counties and cities which are required to have them, and the costs probably double again.

Many posters on this newsgroup object to the $5 billion in annual aid we pay each year to the State of Israel. In fact, the governmental aid we give each year to the Black American Elite is probably twice the size of the Israel aid package.

The lesson in all of this is that racially aware, politically organized minorities can extract a great deal from the public treasury. In both cases, the costs are modest enough so as to avoid economic disruption, but large enough to motivate the respective minorities to remain intensively involved in politics and to continue to block vote their racial interests with 80% plus majorities.

Like most conservatives, McClintock misses the point! He attacks racial quotas by focusing purely on their costs and the economic inefficiency the create, while ignoring their obvious political purpose.

The ultimate prize is the right to tax the great White middle class. For the tax and spend game to continue, the liberals need two things: 1) motivated minority activists to deliver 80% plus majorities in favor of looting the White middle class, and 2) a large minority of uninformed white voters (see Race Bias #1 - "Blissful Ignorance")

There is simply no way for Republicans in Congress to restore limited government and ensure that American taxpayers receive real value for their tax dollars as long as the racial spoils system continues to operate.

If Republicans ever become sincere about restoring liberty to the middle class (as opposed to maintaining their own social respectability and just slowing things down a bit), you will know by their swift and sustained attack on the racial spoils system.


National Review Magazine

July 15, 1996

NR West p 1

The Cost of Quotas


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In California as in many other states-not to mention the nation as a whole-racial and gender quotas now permeate virtually every aspect of government, including the awarding of state contracts, the hiring and promotion of state employees, the admission of students to state universities, and the appropriation of funds for school children. In the area of acquisition of goods and services alone, California has at least 45 specific laws requiring race- or gender-based preferences. These are included in the Education, Government, Public Contract, Public Utilities, Streets and Highways, Unemployment Insurance, and Vehicle codes. Since 1977 all state agencies have been required to employ affirmative action to "overcome any under-utilization of minorities and women in their respective organizations." And in 1988, the Legislature adopted (and Governor Deukmejian signed) legislation declaring, in essence, that competition for 23 per cent of the dollar amount of all state-funded contracts should be limited to three arbitrary classes: 15 per cent to "minority business enterprises" (MBEs), five per cent to "women business enterprises" (WBEs), and three per cent to "disabled veteran business enterprises" (DVBEs). Although these standards were described as "goals" rather than quotas, the law specifically disqualified from bidding any business which does not go to extraordinary lengths to attain the requisite race and gender participation percentages.

DIRECT costs of state affirmative-action programs exceed $156 million per year. For instance, in response to a recent inquiry from Governor Wilson, state agencies estimated their administrative costs for MBE/WBE programs at $12.8 million for 1993-94 (the most recent year for which complete numbers are available). This survey, however, included only those departments under the direct supervision of the governor's office, and did not include the entire education system, which alone accounts for more than half of the state's budget.

As for education, the "Faculty and Staff Diversity Fund" of the state community-college system spent $2.9 million in 1993-94 for preferential faculty and staff recruitment. Meanwhile race-based programs in the University of California and California State University systems cost $47.2 million. California public schools spent $82 million on "voluntary desegregation" programs, while public schools and community colleges together spend an additional $10 million annually on categorical programs specifically based on race, sex, ethnicity, or national origin.

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This shouldn't surprise us. As a 1979 report for the National Construction Industry Council noted: "Any law that assigns a portion of a market to a particular group, in essence, legalizes monopoly.... It is a well-established law of economics that monopoly power leads to higher prices."

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A GENERAL Accounting Office report in 1979 found that minority-firm prices averaged about nine per cent higher than other prices. Applying this factor to California contracts under the MBE/WBE requirements would suggest a total cost of $41.7 million per year in higher prices. This figure is consistent with the experience of the Department of General Services, whose Procurement Division responsible for about 20 per cent of all state business-reported its MBE/WBE related higher prices to be $9.7 million in 1994. Extrapolated, this would come to $48.6 million per year statewide. Likewise, a cost study prepared by the Construction Industry Research Board in 1986-based on a survey of 472 prime contractors, majority subcontractors, and MBE/WBE firms, representing 45 per cent of the public-works construction in California during the previous year-estimated $43 million per year in inflated costs due to preference requirements.

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Estimates of added-private-industry costs range from $130 million (extrapolated from CIRH estimates of added costs in construction contracts) to $240 million a year (by California's Little Hoover Commission). It goes without saying that in the end, customers pay these costs through higher prices, taxpayers through higher government costs, employees through lower wages, and investors through lower earnings.

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OFFICIALLY mandated discrimination in California easily costs $343 million per year in administrative costs to government, compliance costs to business, and inflated prices due to the constriction of competition for the provision of governmental goods and services. This is a conservative number; other estimates range over $677 million. Nor does it tell the whole story: there are many bureaucracies and businesses for which cost information is not readily available; some costs, as mentioned above, are incalculable; and finally, these estimates do not include the costs of racial- and gender-based quotas incurred by cities, counties, and special districts, which would easily double the numbers.

Official discrimination undermines the founding principles of the nation; it poisons the social tolerance which is a necessary condition of a free people; it undermines respect for the law and for governmental institutions. These are social costs, and they are astronomical.

But it also costs money. A lot of it.

Mr. McClintock is director of regulatory affairs for the Claremont Institute.

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