Restricted, regulated and monopolized markets are especially handicapping to people who are seen as less preferred, latecomers and people with little political clout. For example, owning and operating a taxi is one way out of poverty. It takes little skills and capital. But in most cities, one has to purchase a license costing tens of thousands of dollars. New York City's taxicab licensing law is particularly egregious, requiring a person, as of May 2007, to pay $600,000 for a license to own and operate one taxicab. Business licensing laws are not racially discriminatory as such, but they have a racially discriminatory effect.
The Davis-Bacon Act of 1931, still on the books today, had a racially discriminatory intent and has a racially discriminatory effect. The Davis-Bacon Act is a federal law that mandates "prevailing wages" be paid on all federally financed or assisted construction projects and as such discriminates against non-unionized black construction contractors and black workers. During the 1931 legislative debate, quite a few congressmen expressed racist motives in their testimony in support of the law, such as Rep. Clayton Allgood, D-Ala., who said, "Reference has been made to a contractor from Alabama who went to New York with bootleg labor. This is a fact. That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country." Today's supporters of the Davis-Bacon Act use different rhetoric, but its racially discriminatory effects are the same.
The market is a friend in another unappreciated way. In poor black neighborhoods, one might see some nice clothing, some nice food, some nice cars but no nice schools. Why not at least some nice schools? Clothing, food and cars are distributed by the market mechanism while schools are distributed by the political mechanism.
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