Racism at Microsoft?

Microsoft, one of the great success stories in the history of American enterprise, has spent hundreds of millions to defend itself against claim that it is a monopolist. But just as that ridiculous suit is burning itself out, particularly with the change of regimes in Washington, the enemies of Microsoft have launched another sneak attack.

The company now stands accused of-what else?-racial discrimination in hiring and promotion. A $5 billion class-action suit has been filed by former and present employees claiming that they have been damaged by an institutionalized racial bias (a "plantation mentality") at Microsoft.

And guess who has been assigned to adjudicate the case? Thomas Penfield Jackson — the same judge who couldn’t use a computer at the outset of the monopoly case but later divined that the company should be split into two parts, which is to say destroyed. This man has it out for the company.

It’s no secret that blacks are under-represented in high-tech firms, a fact which reflects labor-market demographic realities. There’s just aren’t too many black computer programmers out there. The one they did promote to a high level, Peter Browne, became a millionaire and then paid the company back by suing the daylights out of them. The newest suit claims that executives said things to black employees like: "listen, you N-word, you’ll never get out of this cubicle."

Are we really expected to believe this? Anyone who knows anything about the culture of the technology business knows that the claim of invidious discrimination is absurd. This is an industry where traditional indicators like social status, dress, education, national origin, and race, mean nothing. Performance is everything. You are hired, promoted, and paid according to your ability.

But a non-discriminatory policy doesn’t necessarily lead to egalitarian results, in the software industry or anywhere else. We don’t expect the NBA to reflect a racial cross-section of America, and we don’t expect child-care workers to reflect a sexual balance. Nor should they. In a competitive market economy, diversity is found not at every level of commerce, but in the overall economic structure, where some groups are over-represented in some professions and firms, and under-represented in others. That’s the way freedom works.

But the socialists and central planners don’t see it that way. They want government officials, courts, and lawyers to be in charge of importing political struggles into the job market under the cover of egalitarianism. In the 1990s, the Justice Department and the EEOC have been very sympathetic to this idea, mainly because it rewards constituents who support the political party in power. The workplace has become another front in an ongoing political war.

The lawyer pushing the case against Microsoft is Willie Gary of Florida, a shakedown artist with a history. He took Coca-Cola and Disney for hundreds of millions-suits that were settled privately. The trick is to find a rich company, a handful of disgruntled employees, and count on the fact that most companies would rather pay the ransom money than fight it out in the courtroom.

The grounds on which Gary sues is Title VII of the 1964 Civil Rights Act, but the precise tools are a series of amendments that came late in the first Bush administration. Not only is this sort of extortion legal; it appears to be legally mandated by the standards of proof now required in federal law. If you can find a few folks willing to sign up, just about any amount of civil-rights extortion is feasible.

In a free market, such complaints wouldn’t go anywhere, since employee-employer relations would be governed entirely by contract. And even in the present system, the plaintiffs themselves don’t benefit nearly as much as the lawyers. The arrangement is extremely costly to business, not only in the judgements they pay but in the absurd quota systems they end up instituting to protect themselves against lawsuits (which, in the end, don’t provide much protection at all).

But let’s say the attack on Microsoft is not just another racial shakedown racket, which it is, but let’s say it is not. What do we have to believe the company has done to make this suit plausible? In an extremely tight job market, in which programmers and software engineers can almost name their price, where every firm competes fiercely for employees, and a slight competitive disadvantage can mean losing huge amounts, we are asked to believe that Microsoft thought the following of its black applicants and employees:

"You guys have impressive programming and computer engineering skills, which even surpass those of our present employees and managers. We know that your skills would help give us a competitive advantage. You might be just the key we need to fixing up and marketing our new software, or otherwise better managing our vast workforce. Our stock price might soar!

"We could even afford to make the highest bid to ensure that we enjoy the benefit of your skills and our competitors do not. But, too bad for you, you are black and, for completely irrational reasons, we just don’t like blacks (though we give hundreds of millions in charitable dollars to black schools and communities). Hence, we are going to forego the use of your talents to our own benefit. And we are going to do so despite the lawsuits and public-relations disaster that will come our way if this fact is revealed."

Does anyone believe the Microsoft management thinks this way? How perfectly absurd. I hope the company takes the case to trial, because the plaintiffs are going to have a hard time convincing anyone of their case against a company with a workforce that is 22 percent minority, even if only 2 percent black.

Now, let me be clear. If Microsoft irrationally discriminated, it might be stupid, but in a free society, it should not be illegal. No business should be compelled to hire anyone for any reason, and no employee should be compelled to work for any particular company. Each party can refuse to do business on any ground he chooses.

This ensures that all labor exchanges are performed on a mutually beneficial basis. That is the key to insuring peace in the relationship between laborers and capitalists. There is no such thing as a "plantation mentality" in free enterprise because the employees are not slaves. They are free to come and go on a competitive basis.

But what if an employer behaves like a meany and stiff-arms people because of their race or sex? There are other employers glad to hire competent employees bypassed by invidious discriminators. Indeed, they have a financial incentive to do so. One thing I’ve never understood: why would anyone want to work for a company that doesn’t want him?

Not only should the crazy amendments to the 1964 Civil Rights Act be repealed, but the act itself should be scrapped. So long as it hangs around on the law books, it will be used as a weapon by scam artists to loot businesses and to impose the peculiar American form of socialism, one based on race and sex.

P.S. Gary Willies himself find Microsoft’s products so valuable that he recommends users of his website download the Internet Explorer. For free of course.

Llewellyn H. Rockwell, Jr., is president of the Ludwig von Mises Institute in Auburn, Alabama. He also edits a daily news site,

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