Poisoning the Well: Law & Economics and Racial Inequality

Early Law and Economics advocates asserted that antidiscrimination laws were wasteful and unnecessary. This Article argues that that flawed conclusion resulted in a disregard, especially among African-American political and intellectual leaders, for economic analysis as a means of understanding racial phenomenon. The lack of economic analysis of race in market transactions is of great concern. Disparities in education, housing and employment have been intractable, Suggs argues, because racial disparities in business revenues dwarf those income disparities. To solve these disparities, however, requires not regulations but market incentives. Devising market interventions requires a sophisticated understanding of the way race affects market transactions; and until economic analysis of race is encouraged, little can be accomplished. To encourage efforts to understand the way racial phenomena operate in commercial markets, this Article first identifies the mistakes Law and Economics made early in the civil rights movement. After discussing racial disparities in income, wealth, and business activity the Article argues that the private power created by business ownership helps explain persistent inequality. The Article\u27s economic analysis of specific racial phenomenon suggests further analysis of racial phenomena in commercial markets is needed if there is to be greater African-American business activity-something from which we can all benefit