I'm from the University of Massachusetts. I was born and raised there, so it was good to hear from Devin that, you know, not only are the Yankees evil, but they're also rent-seeking tax leachers as well.
So, my paper, it's different from any Austrian paper I've ever seen. Austrians aren't big on labor history. They're not big on race and ethnic studies, so I thought this is sort of filling that gap that no one else has really done.
A lot of people criticize Austrians for being pure theory, they don't look at any history or anything like that,
but Mises wrote a book called Theory and History, and I don't think anyone ever buys it,
there's about ten used copies out there on sale for five bucks, I bought one a couple of years ago,
but Mises has a really good quote in it, he says,
History deals with human action, that is, the actions performed by individuals and groups of individuals.
It prescribes the conditions under which people lived and the way they reacted to these conditions.
The subjects are human judgments of value, in the ends men aimed at, guided by these
judgments, the means men resorted to in order to attain the end sought, and the outcomes
of their actions.
History deals with man's conscious reaction to the state of his environment, both the
natural environment and the social environment as determined by the actions of preceding
Generations, as well as by those of his contemporaries.
Every individual is born into a definite social and natural miloo.
An individual is not simply a man in general whom history can regard as an abstract.
An individual is at any instance of his life the product of all the experiences to which
his ancestors were exposed, plus to those which he himself so far has been exposed.
And that really sounds more like a sociologist than anything else to me.
And I'm trying to sort of build the Austrian School of Sociology.
But what I look at is black railroad workers in the United States from about 1890 to 1950.
And I found that no one's really looked at them.
It's sort of been the realm of moxists.
So I thought, you know, this is some low-hanging fruit, this should be pretty easy.
So what I use is basically three main theorists.
You have Gary Becker, who had The Economics of Discrimination, the idea that racism in
a market economy is penalized.
If you're not going for the best worker, you're going for the worker who just happens to be
white, you're going to lose out to competitors.
And there's also public choice theory that has definitely been ignored by sociology.
And what you find in the history of railroad workers is the idea that employers use this
divide and conquer strategy with their workers.
They would foster racism in order to keep black workers and white workers apart to prevent
some sort of class solidarity.
What you find is, there's very few instances where this actually happened. In my case,
we found that black workers, I mean, excuse me, we found that white workers were racist
themselves. The racism was endogenous to the workers. This is for several reasons. There's
the idea of, you'll see in cultural studies, that racism allowed them to think of themselves
as Working Class and Have Some Pride.
This falls under the economics of discrimination because as Mises pointed out, it's a psychic
profit.
They got kicks from saying, well, at least I'm not black, and they got a profit out of
that.
Also, you'll find that in a craft union such as the ones I study in this paper, you actually,
what a union basically is, is a monopoly.
You want to cut the supply to bring wages up.
How do you cut the supply and decide who gets the job and who doesn't?
Well, one easy criteria is, well, we'll give it to all the white workers
and forget about the black workers.
So there's another theory in sociology. It's called the split labor market theory.
No one's really thought about it. It's always been
pushed aside for the Marxist theory.
But it says that a split labor market where you'll have the dominant group that gets paid a lot
in a minority group that gets paid some sort of differential less will lead to ethnic antagonism.
These lead to what Anna Bonacich calls caste and exclusion movements, one of which would
be a labor union. So what I found is if we combine Bonacich's split labor market theory
with the economics of discrimination and public choice theory, it suddenly makes a lot of
I wish I had done a 2x2 matrix because I had a good one but I can't put it up so I'll just tell you a little bit about it.
There's four different ways that you can get the collective action you want of excluding black workers and raising wages.
I do this through individual versus collective and coercive and non-coercive.
First one is to pair private goods and public goods. This is individual and non-coercive.
What you'll see that the brotherhoods, that's what the railroad unions were called, they were very dangerous at first.
So they would pair insurance with union membership. So that's how they got people to join their unions.
The second way it's individual and coercive is to use violence. If black workers try to work the railroads,
You shoot at them, you beat them, you tell them if you ever come back here, your family's dead.
There's also the collective non-coercive way.
There's the use of social pressure and moral pressure.
You'll see a lot of these brotherhoods were also fraternal brotherhoods.
And that's where you get a lot of the social capital that allowed them to organize initially.
And then there's nowadays, which is their favorite, this collective coercive government labor regulations
which tell you who can work, whether they have to be in a union, under what conditions they can work.
There's also Jennifer Obeck, she's really underappreciated, she did a lot of work in the 1980s on racism and rent seeking.
And she says that racism is actually a form of rent seeking because racial exclusion is a public good,
and as a public good, privately it tends to be under provided.
She writes, preferences may matter in the collective in a way that they do not matter individually.
Thus, at the very least, racism can emerge from the rent-seeking process.
At worst, however, the rent-seeking process can actually intensify the already existing preferences.
In effect, people can make themselves better off by drawing rings around themselves, by defining themselves in their groups more shabbily.
These gains can arise strictly from preferences. However, it is certainly possible to increase economic well-being of one group by effectively enforcing an economic cartel arrangement among its members.
So when we look at a history, we find that options 1 and 3, pairing public goods and using social pressure, they allowed unions to organize, but they couldn't let them exclude blacks.
And what you'll also find, using violence was pretty ineffective.
Only through the use of the state were they able to exclude black workers.
I'll go through a little bit of the history just real quick.
Railroads started to come about in the 1880s.
And they were loosely organized, but it wasn't until 1898 that we had the Erdman Act, which is the first national labor law you'll have in the United States.
They figured it was under interstate commerce. This is an open and shut case. We can regulate this.
The Erdman Act outlawed blacklisting, yellow dog contracts, firing of union organizers and it allowed for a voluntarily enforceable arbitration.
Mind you, this was all happening while blacks were disenfranchised in the South.
So blacks have no vote through all these legislative laws that come into effect.
Before the Erdman Act, the union is really ineffective.
1877, you have the Southern Pacific strike. Blacks had worked there since the Civil War.
Whites strike in protests. Management shrugs them off. They go back to work.
1898, Louisville and Nashville. Blacks are introduced and whites go on strike in protests.
Again, management shrugs. They go back to work.
Whites strike a couple years later for nonracial reasons and they're replaced by black workers.
1894 you have the Pullman strike. Blacks actually form the anti-strikers union.
A lot of the literature says blacks are pawns of capital.
It's just not true. Blacks knew exactly what they were doing. They were excluded by these
white unions
so they knew it was in their best interest to be strikebreakers.
All this starts to change after the Erden Act in 1898.
You have the famous 1909 Georgia race strike.
um... blacks replaced some white workers, there was a strike and a lot of violence
the strike fails to remove black workers
but federal arbitrators equalized wages
um... even Robert Higgs, who we all know as a great libertarian
argued that this was due to
that when they equalized the wages, this proved
that there was racism on part of the employers
because blacks were still employed after the wages were equalized
I don't believe that's true. They weren't paid less because they were black. They were
paid less because they weren't in the unions. So again, this shows that employers weren't
the bad guys here. It was the unions. We have the 1911 Queen and Crescent Strike. The same
deal, there's a lot more violence. This time, at least 10 black workers were murdered and
and All Fright is halted across the United States.
This led to arbitration because the halting of trade all across America and actually led
to a contract limiting black employment.
It would say something like black breakmen and firemen will make up no more than 50%
of runs on this line.
This basically became standard for the next few years among white unions.
Also in this area, you'll see they tried to use state labor legislation in order to get
their way. You'll have licensing boards, which will obviously be made up of, you know, white
workers to decide who will be able to do this job. You have literacy requirements. The same
way that blacks were excluded from voting, they're going to try to exclude them from
working. And you also have, this was a big one, full crew laws, that said you have had
had a certain class of each worker, but there were certain classes that were synonymous
with black workers, certain classes that were synonymous with white workers. So what they
would do is, it looked racially neutral, but its effect would be to limit the number of
black workers on certain runs. World War I came around. It helped blacks because it was
a tight labor market, but it also empowered organized labor, which we'll see hurts them
The 1920s and the 1930s, a decade of that violence that we talked about, the instances
where dozens of blacks were shot at, stabbed, murdered, in order to prevent them from going
on these runs. A lot of them were killed, but it didn't have any discernible effect
on the number of black workers in the industry. What we really see is the downfall comes with
The Railroad Labor Act of 1926 and its amendment in 1934.
The 1926 act says that collective bargaining is now the only form of work management bargaining.
Mind you that these are all white unions, blacks and most of them are actually excluded
by constitutional means.
It's not even a custom.
So you'll see that now white unions are in charge of bargaining for not just themselves,
but all workers in that class.
Basically, the government gave racist white unions the power to bargain for the black
workers that they had been trying for decades to remove from this industry.
And what it did, it devastated black workers.
I wish I'd brought the graphs, but you'll see that black representation in this industry,
It was stable for decades, and as soon as these acts came into fruition, it dropped.
You'll see they still didn't get that time, they made a fair employment practice commission.
What they did was they blamed management again.
They said, oh, you need to hire more blacks, and it just didn't get through their heads.
But we found that some employers did try to hire more blacks.
What happened was the unions attacked them viciously, said, oh, this isn't in the contract,
you're breaking the contract, and they had to back off.
Because additionally, the 1934 amendment, not only was there civil penalties, was there
injunctions, but there was also criminal penalties for breaking some of these fair labor laws.
By this time, the 1950s, you see the railroad industry go into a decline. They tried to
pass some laws. The Steele case said they have to bargain fairly on behalf of all workers.
Had no discernible effect. And you'll see, as the industry declined, black workers had
There's no chance of ever coming back and it's just a really sad story and I encourage
anyone who's into Austrian economics to really start looking at race and ethnic studies
and labor studies because it's a really important area where we can make a lot of inroads but
for some reason people have not done so I just gave you one example if anyone wants
Take a look at the paper after, have any suggestions, come talk to me after. Thank you.