Racial Tensions: The Market Is the Solution

by David Bernstein

Racial animosities recently were stirred up by the mayoral race in Chicago, which pitted a white candidate against a black candidate in the Democratic primary. Similar tensions are starting to appear in New York City, where Mayor Ed Koch, who is white, will face off against Manhattan Borough President David Dinkins, who is black, in the Democratic primary.

There is no question that race relations have improved tremendously in the United States over the past 20 years. But, if race relations generally are on the mend, why is this trend not reflected in the political news emanating from our major cities? The answer has to do with the coercive nature of politics.

Politics is a zero-sum game. The winning side gets the spoils, the losers get nothing. Voters believe that candidates of their own race will "take care of their own," so they vote accordingly. Racial tensions therefore are inflamed when an election pits a white candidate against a black candidate.

It is important to contrast the divisive nature of politics with the integrating nature of free markets. In recent mayoral elections in Chicago, the majority of blacks voted for the black candidate, and most whites voted for the white candidate. But in their daily shopping, how many people patronize only members of their own race -- or restrict themselves to goods that were made by a particular ethnic group? Any person who makes such a choice will deprive himself of an opportunity to get better products or services from merchants of another race.

The integrating effects of markets can be observed every Sunday and Tuesday during the summer at Aqueduct Race Track near my home in Queens, New York. On those days, the parking lot of the race track is host to a huge flea market. The track is located in a racially troubled area of South Queens, 10 minutes from Howard Beach, site of a racial attack in December 1987.

Yet, every Sunday and Tuesday, people gather from all over the area to buy a wide variety of merchandise. Customers and merchants represent just about every racial, religious, and ethnic group, and are drawn from every social class. Immigrants from India and Korea mix freely with native blacks, Jews, Italians, and others. The merchants haggle with the customers over prices, and the exchanges sometimes get heated, but in the many years that I have been going to the flea market, I have never seen anything more than harsh words exchanged, and security is minimal.

Why are such diverse people able to get along so well? Could it be that people who go to flea markets are drawn from a more tolerant group than the public at large? Of course not. The flea market brings together about as random a cross section of the population as you can possibly find. I have no doubt that many of the people who frequent the market harbor deep racial hatreds. So why don't these tensions ever blow up? The answer is that the flea market, unlike the political arena, brings people together for their mutual interest.

In a free market, exchanges are made only when each side believes that the exchange is in his best interest. The fact that everyone at the flea market, black and white, rich and poor, benefits from being there is a powerful incentive for people to forget their differences and get along. In the process, racial tensions are reduced, as a wide variety of people are able to observe each other close up and see how foolish stereotypes and hatred are.

Contrast the natural amity of the market to the natural discord of politics. In politics, the side with majority support wins, and forces the unwilling minority to go along. This can't help but cause bitterness and resentment on the part of the minority towards the majority.

Relations among individual members of diverse groups are steadily improving, as people see the foolishness of discriminating in the private sphere. But as the public sphere grows ever larger, those gains are limited by political tensions. The shrinkage of government in favor of markets would do a lot to increase racial harmony in American cities. If you don't believe it, come to the parking lot of the Aqueduct Race Track this Sunday.