Where did real Richard Epstein go?

Richard Epstein is one of my favorite academics. He was consistently thoughtful and liberal until this bizarre clunker (in a REASON review of a new Glenn Loury book):

That virtually every major private corporation and private university embraces some form of affirmative action suggests that state institutions doing the same tasks should be allowed the same latitude. A bar against any form of affirmative action is a tough position to defend inside any organization, public or private. The great danger here is legislative fiat, such as California’s Proposition 209, which forces all public universities to conform to Ward Connerly’s monochromatic vision of human nature.

Epstein understands better than almost everyone else that in all sorts of environments the Government must operate under different rules than private individuals because it has different incentives than private individuals. Even if there is some sort of optimal degree to which affirmative action is actually beneficial to society, there is no reason to believe that public university administrators are going to get it right, or come even close to getting it right. They have no reason to get it right, because they pay no cost for getting it wrong. (One is hard pressed to find much of a cost for getting it wrong at Harvard or Stanford, either, but that’s another story.)

At least private corporations will feel the cost of hiring less competent people, if that’s what their affirmative action brings. And if they actually end up with more competent people because they’ve expanded their pool of qualified applicants (which was, after all, the original goal of affirmative action in the first place), then they have a positive incentive to continue it.

Public university administrators, OTOH, pay a very small price for indulging their private whims. Especially if the entire university culture endorses affirmative action. IIRC, a couple generations ago Jewish scientists were something like 10 times more likely to be employed in private industry than in academia. Surely the fact that industry pays a price for discriminating against Jews that academia doesn’t played some role in that disparity. Same principle. Just different favored groups.

Epstein also swing and missed on Loury’s “racist beliefs amongst employers can be self-fulfilling” argument, which looks like this:

Racist employer suspects that blacks are less productive than whites.
Therefore racist employer watches over black employees more carefully, and is less likely to give black employees the benefit of the doubt.
Thus, a higher percentage of equally productive blacks end up being fired, confirming the original racist beliefs.

This is fine as far as it goes, buuuuuut, fails to recognize that market competition systematically weeds out employers who make inaccurate inferences about employee productivity. That those observations sound superficially plausible really doesn’t matter. If the inference is wrong, the market systematically disfavors people who think it is right.

In general Glenn Loury, and everyone else who truly believes that blacks earn less money because they are systematically discriminated against by employees should get out of academia and start a business. If they are right they will both make a ton of money and help a lot of people. If they’re wrong, they won’t be dragging the rest of the country along for the ride.