Making Economic Sense by Murray Rothbard
For many years, America’s campuses have been sunk in political apathy. The values of the 1950s are supposed to be back, including concentration on one’s career and lack of interest in social or political causes.
But now, suddenly, it begins to seem like a replay of the late 1960s: demonstrations, placards, even sit-ins on campus. The issue is apartheid in South Africa, and the campaign hopes to bring down apartheid by pressuring colleges and universities to disinvest in South Africa. Coercion against South Africa is also being pursued on the legislative front, including drives to embargo that country as well as prohibit the importation of Krugerrands.
I yield to no one in my abhorrence of the apartheid system, but it must never be forgotten what the road to Hell is paved with. Good intentions are scarcely enough, and we must always be careful that in trying to do good, we don’t do harm instead.
The object of the new crusade is presumably to help the oppressed blacks of South Africa. But what would be the impact of U.S. disinvestment?
The demand for black workers in South Africa would fall, and the result would be loss of jobs and lower wage rates for the oppressed people of that country. Not only that: presumably the U.S. firms are among the highest-paying employers in South Africa, so that the impact on black wages and working conditions would be particularly severe. In short: the group we are most trying to help by our well-meaning intervention will be precisely the one to lose the most. As on so many other occasions, doing good for becomes doing harm to.
The same result would follow from the other legislative actions against South Africa. Prohibition of Krugerrands, for example, would injure, first and foremost, the black workers in the gold mining industry. And so on down the line.
I suppose that demonstrating and crusading against apartheid gives American liberals a fine glow of moral righteousness. But have they really pondered the consequences? Some American black leaders are beginning to do so. A spokesman for the National Urban League concedes that “We do not favor disinvestment . . . . We believe that the workers would be the ones that would be hurt.” And Ted Adams, executive director of the National Association of Blacks Within Government, warns that disinvestment would “come down hard on black people,” and could wind up “throwing the baby out with the bath water.”
But other black leaders take a sterner view. A spokesman for Chicago Mayor Harold Washington admits “some concern that the most immediate effect of disinvestment may be felt by the laborers themselves,” but then adds, on a curious note, “that’s never an excuse not to take action.” Michelle Kourouma, executive director of the National Conference of Black Mayors, explains the hard-line position: “How could it get any worse? We have nothing to lose and everything to gain: freedom.”
The profound flaw is an equivocation on the word “we,” a collective term covering a multitude of sins. Unfortunately, it is not Ms. Kourouma or Mr. Washington or any American liberal who stands to lose by disinvestment; it is only the blacks in South Africa.
It is all too easy for American liberals, secure in their well-paid jobs and their freedom in the United States, to say, in effect, to the blacks of South Africa: “We’re going to make you sacrifice for your own benefit.” It is doubtful whether the blacks in South Africa will respond with the same enthusiasm. Unfortunately, they have nothing to say in the matter; once again, their lives will be the pawns in other people’s political games.
How can we in the United States help South African blacks? There is no way that we can end the apartheid system. But one thing we can do is the exact opposite of the counsel of our misled crusaders.
During the days of the national grape boycott, the economist Angus Black wrote that the only way for consumers to help the California grape workers was to buy as many grapes as they possibly could, thereby increasing the demand for grapes and raising the wage rate and employment of grape workers.
Similarly, all we can do is to encourage as much as possible American investment in South Africa and the importation of Krugerrands. In that way, wages and employment, in relatively well-paid jobs, will improve for the black laborers.
Free-market capitalism is a marvelous antidote for racism. In a free market, employers who refuse to hire productive black workers are hurting their own profits and the competitive position of their own company. It is only when the state steps in that the government can socialize the costs of racism and establish an apartheid system.
The growth of capitalism in South Africa will do far more to end apartheid than the futile and counterproductive grandstanding of American liberals.