Our libertarian friends have a steady stream of standard arguments as to why bosses should be able to hire and fire anyone they please. They then go on to say that they, personally, wouldn't do something like this and don't support this type of discrimination at their work place.
This mixed attitude shows the logical fallacy in their position. They follow some higher, internal sense of fairness (or expressed as economic efficiency), but would permit others to violate these principles. To quote the old aphorism, "what's good for the goose is good for the gander". It turns out that the vast majority of libertarians belong to the group that has never suffered from the most overt types of discrimination: white men. They are the ones who, when asked, generally say that discrimination is mostly a thing of the past in the US. Unsurprisingly those in the traditionally disfavored groups see things otherwise. For example, a 2008 CNN poll found that 11% of whites thought that discrimination was a serious problem while 43% of blacks thought it was. While it may be pleasant to think that Utopian ideas of fairness are sufficient to yield equality of opportunity, the reality, as experienced by those in the disfavored groups, is quite different. This leads to the question of what to do about this.
The US has had a long history of discrimination based upon characteristics over which people have no control, their gender, ethnicity or national background being the most common. A person can't change who their parents were, so such discrimination is immoral since it allows for no remedy by one's own efforts.
Do-gooders have pushed for more equality since the founding of America, but with mixed results. The abolition of slavery, perhaps the biggest single step to eliminate such an injustice, was quickly diluted by the introduction of Jim Crow laws which relegated blacks to second class citizen status once again. This was especially pernicious because a legal framework was set up which gave the majority favored treatment at the expense of others. Similar cases have been used in the case of women and immigrants, although not to such a large extent. Recently we have seen debates over legal protections based upon sexual orientation.
Expecting people to act fairly on their own has been shown not to work, and allowing localities to create discriminatory laws has undermined the basic principle of equality before the law:
...No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws... [14 amendment]
As a result of all this actual experience, ideas on how to remedy the situation more directly became popular starting in the early 20th Century and reaching a turning point in the 1950's and 1960's. The first attempts were directed at Jim Crow and led to the formation of groups like the NAACP in 1909. The biggest changes came with the striking down of discriminatory segregation laws in education and public accommodation. This changed the legal status of discrimination, but public attitudes did not follow to the extent that was hoped for. In fact the degree of segregation now is as high as it was before the legislation was passed. Schools and housing are highly segregated, especially since active steps like busing and siting mixed income housing have been eliminated.
Another approach has been the use of "affirmative action" which attempts to give extra help to those in groups disfavored in the past to compensate for the effects of discrimination in the "past". As I just showed arguments that such special treatments are not needed, because the discrimination no longer exists, are not born out by the facts. This unpleasant reality hasn't prevented libertarians (and outright racists) from using it as an argument, however. There is currently a case before the Supreme Court over whether a test for firemen promotion is discriminatory because none of the black and Hispanic applicants passed it. The city threw out the test and is being sued by whites. In other words the whites are claiming they are the disfavored class. This excuse was also used in (successful) cases before the court against actual affirmative action policies which were aimed at bringing more minorities into colleges. The results of this reversal have been as predicted and minority enrollment has fallen off as a result.
Since last year, when racial preferences were still permitted, the number of African Americans receiving letters of admission has dropped 57% at Berkeley and 40%, at UCLA. Hispanic acceptances have declined 40% at Berkeley and 33% at UCLA. [WSJ 2009]
The usual argument given about this sharp change is that it "proves" that unqualified students were being admitted. However, once admitted the minority students tend to do as well as others in terms of academic progress and graduation rates. The correlation with "success" is not race or ethnicity, but socio-economic background. Children of poor parents have a tougher time academically than do those of those better off. This is something to keep in mind when debates over education point to poor teachers as the principle problem, another area where facts are ignored in favor of ideology.
Now we come to the workplace. Should bosses be able to hire and fire anyone they please? History has shown that allowing this leads to bad outcomes. Whole classes of people are denied the opportunity to reach their full potential. Bosses can form informal combines so that disfavored workers are paid less as a consequence. This was the basis for much of the hiring practices in the heyday of the textile mills. Young women from the countryside were deliberately selected over others, thus keeping the labor costs down. They were inexperienced, unorganized, and left after a few years to get married and raise families. School teachers were fired when they got married for similar reasons. Once one firm in an industry adopts discriminatory policies which keep its labor costs low, then the others follow to remain competitive. Workers can't just quit and go elsewhere. Women working in these industries were among the first to organize for better working conditions in the late 19th and early 20th Centuries. They knew what the score was.
Based upon this experience workers pushed to have discriminatory practices eliminated as a matter of law, expecting good intentions on the part of employers never worked, despite the claims of Utopian libertarians. Corporations are creatures of the state, they are granted certain legal rights, including limited liability and various tax benefits as well as protection against fraud and illegal combines by competitors. It is, therefore, appropriate that they accept certain obligations as a result of the privileges they have received. These include requirements that they provide safe working conditions, that they pay wages that conform to legal minimums, that they sell safe and efficacious products, that they don't make false claims about their offerings, and that they don't discriminate against workers in those areas which have been most affected by discrimination in the past: gender, race and age.
It would be nice to think that we could depend upon people to do the right thing in life, but we can't, which is why locksmiths have steady employment. Laws are made to limit the mischief people can do, knowing that there are always those tempted to do such things. We can't change human nature, no matter how much Utopians believe, so the best we can do is try to limit the scope of bad behavior. The power of a democratic government is that it is subject to the will of the people. The road to fairness may be long and twisted, but it can be traversed. Compare this to non-democratic states where ethnic discrimination can persist for centuries. Look at the discord in places which lack true democratic institutions and continue to suffer civil unrest as a consequence. It's not a pretty sight in Congo or Rwanda or the Balkans or the many south Asian countries with ethnic civil unrest.
Having restrictions on freedom of action on the favored to
avoid these types of evil is a small price to pay.