Government Monopolies Institutionalize and Perpetuate Racial Discrimination

By Phillip W. Magness

The problem of racial discrimination in society is usually examined through the lens of combatting its ethical wrongs. Without losing sight of this important charge, any attempt to address the pernicious effects of prejudice must also consider the institutional structures that allow it to inflict its harms upon minorities. This was a key insight of economist G. Warren Nutter in his forgotten 1969 bookThe Strange World of Ivan Ivanov.

Using the framework of a comparative analysis between the United States and the Soviet Union, Nutter tackled the problem of discrimination head on. “In the world of practical alternatives,” he wrote, “the important question to raise in judging a society is not whether there is prejudice but whether there are means of escaping it.”

In doing so he differentiated the moral sphere of individual prejudices and the public sphere of institutional discrimination. As much as we can and must cultivate ethical norms that enjoin against “private manifestations of prejudice,” such actions are individually constituted ethical wrongs. It is therefore in vain, Nutter contended, to expect them to completely vanish unless “we enter a golden age of angels on earth.” Discrimination itself is a product of “concrete personal attitudes,” not “the abstract mentality of some collectivity.” Accordingly, the task of combating it becomes one of moral suasion.

By contrast, institutional discrimination — including types that inculcate and reinforce individual prejudices — is a matter of political authority: “The persecution at issue here is a matter of official policy, enforced by the power of the state.” This second source of discrimination, Nutter continued, “is always more pernicious than the former,” precisely because its political dimension cultivates a uniform standardization of discriminatory rules against an entire group or class of people. Such rules are not only malicious in their intent, but impossible to escape when enforced because they become matters of state policy.

The occasion of Nutter’s remarks permitted him to compare racial segregation in the United States to a wide variety of less discussed Soviet practices that institutionalized discrimination (for example, his studies of the Soviet economy revealed that prosecutions for so-called “economic crimes” against the state tended to disproportionately target Jewish merchants).

In tackling these issues he did not shirk the problems of the Jim Crow South. As a society we must “deplore unfair discrimination in private affairs and attempt to reduce it through persuasion,” such that it will continue to weaken with the passage of time, as he noted in a 1967 lecture on the same topic. Immediate action, however, required that we “must condemn the coercive segregation of Negroes enforced by law over so many years” and “press for the continued elimination of all discriminatory treatment under law.”

Economic markets, he contended, formed the linchpin of this strategy as they offered one of the most formidable mechanisms to escape discrimination. The purchaser of a new television set evaluates it by quality and price, caring “not about what color the hands were that assembled it.” Laws and policies that institutionalized discrimination, whether explicitly through racial segregation or by implicit design as in the anti-Semitic enforcement patterns of Soviet economic regulation, prevented the availability of an escape through economic choices.

Nutter did not offer markets alone as a magic fix to discrimination. Quite the contrary, he was under no illusion “that unfair discrimination is absent in the choice of customers and employees.” Rather, he held that economic choice was not a sufficient condition for combatting discrimination alone. It was however necessary and essential.

 

Virginia’s Discriminatory Example

The anti-discrimination arguments presented in Ivan Ivanov did not emerge from a vacuum of intellectual abstraction. They pertained to a subject of personal familiarity to its author, who directly witnessed the fight over school desegregation while serving as a University of Virginia faculty member and parent of several young children in the Charlottesville, Virginia, school system. Nutter found his family thrust into this political battle a decade earlier when the Virginia state assembly adopted a series of “Massive Resistance” laws, intended to halt the implementation of Brown v. Board of Education.

In 1958 a federal court ruling ordered the integration of the Charlottesville public school system, including Venable Elementary School, which Nutter’s children attended. Although the court order was meant to initiate the admission of black students at Venable under Brown, it also triggered a Massive Resistance statute that allowed the state of Virginia to forcibly close the affected schools and thereby prevent integration. Governor J. Lindsay Almond signed such an order at the start of the fall 1958 school term, effectively shutting thousands of students — white and black — out of the public school system. Nutter’s children were among the students affected.

Parents at Venable and a nearby high school scrambled to action to ensure continuity of schooling while the political battle played out. In Charlottesville, most of the segregation-aligned parents pooled their resources to create a privately operated “segregation academy” at a rented building under the auspices of the Charlottesville Educational Foundation. The Nutter family, by contrast, joined a separate and smaller network of makeshift classrooms operated by the hastily formed Parents’ Committee for Emergency Schooling (PCES). While the PCES officially took no position on Brown and only sought the overturn of the Massive Resistance laws that closed Venable Elementary, its membership drew heavily from university faculty, who tended to oppose segregated schooling.

Professor and Mrs. Nutter quickly emerged as leading contributors to the PCES effort. They volunteered their house as a makeshift seventh-grade classroom and recruited Lucille Leitch, a displaced teacher from Venable, to provide instruction. During the first week of operations, Nutter even brought home a stack of desk chairs from the UVA economics department to replace a repurposed assortment of benches and television stands and even a converted ping-pong table.

As news media descended on Charlottesville to cover the unfolding crisis caused by the Massive Resisters, the PCES selected the Nutter household to showcase their response. Newspapers across the country ran photographs of students huddled together in the Nutter family game room as Mrs. Leitch delivered her lessons. National coverage of the school-closure crisis made an embarrassing spectacle out of the state government’s intransigence. “Virginia’s massive resistance policy is up a rather dead end now, but no one seems able to predict just how it will break,” noted Nutter’s UVA colleague James M. Buchanan in a letter to their mutual graduate school mentor Frank H. Knight. While segregationists such as the state’s senior U.S. senator, Harry Flood Byrd, vowed to press on in defiance of the courts, the crisis revealed cracks in the electorate’s willingness to countenance the policy.

Massive Resistance did break after a semester of school closures when a pair of simultaneous rulings by federal and state courts struck down the triggering law. The episode nonetheless left a strong impression on Nutter, who recounted his experience during a panel discussion of education policy at the 1959 meeting of the Mont Pelerin Society. Nutter’s comments focused on the need to differentiate what he called “universal education” from “government education,” hinting at the logic behind his own proposal (along with Buchanan) for a school voucher system.

Per the moderator’s request at the outset to keep the panel focused on education theory, he avoided directly commenting on school segregation. He did however make passing reference to the “very unfortunate circumstances in the south at the moment,” which were inducing people to “[think] about things they should have been thinking about for a long time.” Crucially, Nutter described the political situation in Virginia as an “ill wind that blows no good,” repeating an identical metaphor that Milton Friedman used to condemn the segregationist backlash to Brown in a private letter to Nutter a few months prior.

He then pointed to a silver lining in his own family’s situation. Even in the non-ideal conditions of makeshift classrooms, the school-closure crisis revealed how state monopolization of the public education system enforced uniformity upon its participants and worked against their educational success. A challenge to this uniformity “came solely as a result of forced diversification, of a breaking of a monopoly that has existed in these states so many years. And I think we have a great deal to hope for in the future.”

In short, Nutter appears to have been alluding to the argument he would flesh out in detail in the years that followed. In enforcing a uniform preference onto society, state monopolies in economic life drive out individual choice. Insofar as choice is an escape mechanism from bad policy, including policies of institutionalized discrimination, we should expect the most harmful and forceful discriminatory conditions to emerge where choice is specifically impeded by the government.

 

A Tale of Two School Boards

Outside of hosting a PCES classroom and his related advocacy of school vouchers the following year (which, like Friedman, he presented as a non-coercive means of bringing about school desegregation), Nutter did not weigh in on the school-desegregation process any further. His academic expertise was almost entirely in the realm of comparative economic systems, and particularly empirical approaches to measuring Soviet economic performance. That he used the Soviet affairs to make substantive arguments on the economics of racial discrimination is nonetheless indicative that he thought about the problem in great depth, and likely frequently.

As an interesting aside though, the fallout from the Virginia schools crisis itself served as a powerful illustration of the arguments Nutter later developed in Ivan Ivanov. To see how, we may turn to the desegregation experiences of two local school boards — Charlottesville and Arlington County (near Washington, D.C.), where a somewhat-different chain of events unfolded.

As discussed, Charlottesville found itself placed under the state-controlled school-closure policy of the Massive Resisters. This did not, however, mean the hands of local politicians were absent from the effort to preserve segregation against federal court order. When the courts struck down the state school-closure laws in January 1959, the Charlottesville school board jumped into action with its own alternative scheming to preserve de facto segregation.

The Charlottesville school board laid out its strategy at an emergency meeting only a week after the court rulings to reopen its schools. The brainchild of school board attorney and seasoned anti-integration litigator John S. Battle, Jr., the plan conceded some level of integration would be unavoidable because of the federal court order. Battle settled upon containing black enrollment to the barest minimum — perhaps less than a dozen students, he bragged to the school board — by using other discriminatory means at their disposal.

First, the school board could adopt a strict geographic zoning system that assigned most black students to existing black-majority schools. The map would make all but a few black students who lived near the borders of each white neighborhood ineligible to attend white-majority schools unless they moved into a white neighborhood (which could be both economically prohibitive and subject to the additional problem of housing discrimination).

Second, to exclude registrants who could not be geographically zoned out of the white-majority schools, Battle proposed adopting strict enrollment caps on their classroom sizes. In practice this meant that a black student could only register if a white student left and opened a previously occupied desk. With no small irony, it also meant that the voucher program advocated by Friedman, Nutter, and Buchanan became its own existential threat to segregation in Charlottesville, as it necessarily entailed free movement between schools. Battle accordingly railed against vouchers in a March 1959 speech to the Venable PTA in which he argued that any white student departures would open the enrollment-capped school up to “negro engulfment.”

Note that neither of Battle’s policies explicitly barred black registrants at the white-majority schools; instead they raised steep regulatory barriers intended to make registration all but impossible, keeping segregation operational by any other name.

Compare the Charlottesville situation to that in Arlington, which played a prominent role of its own in the desegregation fight. In the aftermath of the 1954 Brown decision and facing federal court challenges of its own from the NAACP, the elected Arlington school board became the first in the state to initiate the desegregation process.

The same Massive Resistance measures that created the legal trigger to shut Charlottesville’s schools also attempted to contain this early progress in Arlington by stripping the county of its elected board. The appointed replacements to the board did include some “moderates” on the segregation issue, but they tended to treat the resolution of Brown as entirely secondary to the regular political goals of the teachers’ unions. As was common in that era, public education interests tolerated segregation and would not object to integration, provided that either serviced the objective of securing greater school finance and teacher pay.

Facing court orders to implement Brown, the new board officially committed itself to a desegregation policy aimed for the start of the January 1959 semester. Since this process was still being hammered out in the fall of 1958 it did not technically fall under the school-closure law that affected Charlottesville. Yet only a few days after state officials ordered the closure of Venable Elementary, Arlington school board officials appeared in an Alexandria, Virginia, federal courtroom to answer the NAACP’s charge that they were planning to impede an earlier integration order.

The appointed board had already agreed to follow a 1956 order from Judge Albert Bryan to integrate Stratford Junior High school, with a planned admission date set for February 1959. Earlier that summer a total of 30 black students applied to transfer into Stratford on the planned desegregation date. The Arlington school board, however, responded by rejecting all 30 applicants.

Federal court testimony from September 1958 shows the Arlington officials prepared a long list of bureaucratic excuses to justify their decision. Responding to questioning from NAACP attorney Frank D. Reeves, Arlington School Board Chairman Barnard Joy first claimed that six black students who lived within Stratford’s geographic boundaries were academically unprepared and would fall in the bottom 15 percent of Stratford students.

Reeves and Thomas H. Henderson, an expert witness and president of the historically black Virginia Union University, presented test results from the rejected applicants, showing that several scored ahead of at least a third of the white student body currently attending the school. Plainly, they fell within the normal range of academic standards at Stratford. Joy then rolled out a list of other excuses including alleging “overcrowding” at the white schools, asserting that the black applicants displayed difficulty in “adaptability to new situations,” and even claiming that some suffered from “psychological problems” that supposedly rendered them unfit to receive instruction amidst white classmates.

In short, the school board sought to maintain racial separation by any other means than calling it segregation. Bryan granted the NAACP a limited victory, ordering the admission of 4 of the highest-scoring applicants at the start of the spring semester. The other 26 remained in segregated black schools.

Interestingly and often left out of the story, the overturning of the Massive Resistance laws in early 1959 did little to improve Arlington’s intentional stalling even after it technically “integrated” on February 2, 1959. At the start of the 1960 school year another 31 black students applied for transfer. The same Arlington school board promptly rejected 20 from the group. Reeves sued for the NAACP in July 1960. In another round of testimony before Judge Bryan, Joy attempted to justify the rejection decisions again by appealing to test scores and by claiming that the rejected applicants lacked the “mental maturity” to attend Stratford and other white-majority schools. The integration process would encounter similar “passive”-resistance strategies for another decade, even in locales such as Arlington that touted their “progressive” political credentials.

 

Government Discrimination as Government Failure

In both Arlington and Charlottesville, these and other indirect school board strategies for resisting desegregation persisted well into the 1970s after both school systems integrated on paper in 1959. Dozens of NAACP lawsuits, legal hearings, and subsequent court rulings would be required to simply bring the two school districts into minimal compliance with Brown v. Board, even though the decision was settled case law as of 1954. Passive resistance cast a long shadow, and came directly from the actions of state and local government officials that disingenuously insisted they were complying with the decision.

The reason they were able to drag their feet for so long and obstruct the plain intentions of the Supreme Court with regulatory maneuvers stems from the persistent legal monopoly of a single government-school provider. When state and local political actors decide to discriminate against a group of people as official policy, whether openly or through roundabout regulation, the absence of an escape option means that the victims of that discrimination have only limited recourse to appeal for the redress of wrongs. In the case of the Virginia schools, that recourse only came after decades of expensive and cumbersome appeals through the slowly grinding wheels of the federal court system.

While we may justly celebrate the hard-fought victories through that system, its painstakingly slow and persistently resisted process returns us to the core of Nutter’s observation in Ivan Ivanov: the state is an astoundingly poor tool for addressing the problem of racial discrimination, and often becomes an agent of perpetuating that discrimination itself.

We find this principle at play in Nutter’s rhetorical query for discrimination in a totalitarian system: “Where may a Soviet citizen turn who is oppressed by reason of race, color, or creed?” There is only one answer: the state. And when the state itself, or some component of it, becomes a participant in the discriminatory act, the only means for “minorities [to] escape persecution” is to seek escape from the state itself through the risks of illicit markets or the physical dangers of direct resistance. If we wish to address and alleviate the harms of discrimination, it follows that we must be continuously mindful of the role of state actors in entrenching and perpetuating the very same.

 

Sources Used:

Charlottesville School Board Papers, University of Virginia

Frank H. Knight Papers, University of Chicago

Project DAPS, Arlington County Public Library

Mont Pelerin Society Papers, Hoover Institution

Nutter, G. Warren. The Strange World of Ivan Ivanov. New York: World Publishing, 1969.

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Phillip W. Magness

Phil Magness is a Senior Research Fellow at the American Institute for Economic Research. He is the author of numerous works on economic history, taxation, economic inequality, the history of slavery, and education policy in the United States.