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Originally Posted by Not Bob
Pardon my skepticism, but I have long heard arguments about how the Invisible Hand of The Market prevents discrimination because companies that "irrationally" discriminate (i.e., on the basis of race, sex, religion, etc.) would be forced out of business by losing out to companies that "rationally" discriminate (i.e., on the basis of whatever the market is - skills, credit-risk, speed of fastball, etc.).
With the notable exception of professional sports, I don't think that this has occurred.
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Really? It's the exceedingly rare company that's okay with the world thinking it discriminates, and that's not entirely about anti-discrimination laws.
Moreover, those "shocked" hiring managers in the article, who believe they value diversity and could not believe that they were unconsciously discriminating, would not have the opportunity to do so if decisions were guided by actual data.
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So the idea that the lenders won't discriminate on race now that they have all of these wonderful (albeit imperfect) tools and databases because they only care about making money is Not Credible.
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We probably need to deal with the uncomfortable realization that redlining may well have been profit maximizing for a banking system operating in our racist society. Or at least not money-losing when all of the other banks are doing it too.
But no, market incentives will not fix everything and regulation is needed too.
