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The Economics of Racial Prejudice   (January 15, 2007)

Today we honor a courageous American leader, Martin Luther King, Jr. It's a good time to recall the economic underpinnings of racial prejudice. To illustrate the economic motivations for what appears to be racially motivated hatred and oppression, let's return not to the Jim Crow South but to bucolic California circa January 23, 1848--the day before gold was discovered.

Californios (residents and settlers of Mexican descent) lived, worked and owned property alongside the Caucasian Americans who had first declared the California Republic in 1846 (which lasted 22 days, as unbeknownst to the "insurgents," the U.S. had declared war on Mexico several months earlier.) California's Native American tribes had already suffered from European diseases and the oppression of their Mexican overlords, but the sparsely populated areas of the Sierra afforded them remote places to live far from official control.

Gold severely disrupted this bucolic balance. Hispanic residents and gold-seekers were suddenly seen as competitors for gold, and as a result they were told in no uncertain terms to quit the gold fields and relinquish their Gold Country land claims. (It was still OK to have a land claim in dry, worthless Los Angeles, that wretched little collection of shacks down south.)

The Indians' enclaves in Gold Country meant they had to be eradicated, too. Bounties were declared on Native Americans, much like bounties on predators and four-legged pests.

The news of gold soon brought prospective gold miners from around the globe. Those from Hispanic America were told to go back home; the Chinese were allowed to set up entrepreneural shops in Gold Country and work abandoned claims, as long as they didn't appear to be finding too much yellow metal. But their industry and thrift soon threatened the economic perquisites of the Caucasian Americans, and various laws restricting their ownership, citizenship and rights to emigrate to America were put into law--laws which limited immigration from China until World War II, when it was suddenly viewed as bad form to treat an ally so shabbily.

Why were racial groups which lived in relative harmony in bucolic, sparsely populated and poor California suddenly treated with intolerance? To restrict their access to wealth or the means of wealth, to maintain the perquisites of the ruling class, and to limit competition. If a Chinese merchant started offering customers better service at lower prices than the Caucasian shopowner, the solution was obviously to drive the Chinese businessman out of town, or sequester him in a ghetto where he no longer had access to customers other than his own kind (e.g. Chinatown).

Much of what Martin Luther King, Jr. sought was, in this view, simply fair access for African-Americans to the economic opportunities and spoils which had been denied since Reconstruction, when fairness, or at least a rough beginning of fairness, had been imposed by an occupying Army. When the North tired of supporting its occupying Army, it withdrew and the rule of law vanished along with that military force. Reconstruction died and oppression of a new and pernicious sort enveloped the South for 100 years.

The struggle for equal access to economic opportunities has made great progress, but the guarding of one group's perquisites can play out in numerous ways--racial prejudice being just one of the most egregious.

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copyright © 2007 Charles Hugh Smith. All rights reserved in all media.

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