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Neil H. Buchanan

Drawing Lines for Business Behavior: Lessons from the Rand Paul Controversy and President Obama's Response to the Gulf Disaster


Thursday, June 17, 2010

A month has not yet passed since the highly controversial May 19 interview of Rand Paul on MSNBC's "The Rachel Maddow Show." In that interview, as readers will likely recall, the Kentucky Senate Republican nominee expressed his discomfort with the Civil Rights Act of 1964 insofar as it prohibits businesses from discriminating on the basis of race in providing "public accommodations" -- that is, goods and services for sale to the public.

The media's attention has since turned elsewhere, of course, but only after a ritual of outrage was enacted by the candidate's backers, who claimed that this was a "gotcha" moment; complained that the media is too liberal; and offered all of the other predictable responses they could in an attempt to defend their candidate.

Among the non-partisan attempts to analyze the controversy, easily the most fatuous was a news analysis article on the front page of the May 26 New York Times, which tried to tie the Paul controversy to the then-brewing controversy over Connecticut Democratic Senate candidate Richard Blumenthal's false claims that he served in Vietnam during the 1960's. Noting that civil rights were a major issue in the 1960's, as was the Vietnam War, the article claimed that the Paul and Blumenthal incidents illustrate that Baby Boomers just cannot get over the fights that dominated their formative years.

The message of the Times article, which tracked the arguments made by Paul's supporters in particular, was that arguing over the Civil Rights Act of 1964 is a silly waste of time, a digression into pointless discussions of long-since-resolved issues from nearly a half-century ago that are irrelevant to current and future members of the Senate.

This further suggests that, when Paul announced that he would have voted for the Act as a whole, had he been serving in the Senate in 1964 -- even though he never backed away from his discomfort with the particular provisions that had tripped him up on Maddow's show -- this put the matter to rest. The Sixties are over, and this candidate would have voted the right way on this bill. Time to move on.

In this column, I argue that the lesson from the Paul controversy had nothing to do with the Sixties, and that the underlying issue in the controversy continues to be of pressing importance in governing the nation. Moreover, I argue that the fundamental position that Paul's comments exposed is present, albeit in less extreme forms, in the current Democratic Party and, in particular, in the governing assumptions of President Obama.

Racism and Racial Insensitivity

Opposition to the "public accommodations" requirements in the Civil Rights Act is based on the notion that business owners, even if they are economically-misguided and even if their minds are poisoned by fear or bigotry, should be able to decide with whom they will do business. On this theory, it is a private decision with whom one will conduct trade, and the government should have nothing to say about that decision. If one adheres to a certain economic argument, which is most closely identified with Milton Friedman, one can even believe that those businesses that do discriminate based on race (or other criteria) will ultimately be forced to change their ways or disappear, due to competition from more enlightened businesses.

During the now-infamous interview, Paul went to great lengths to assure Maddow that he is not a racist. He, in fact, expressed the hope that no businesses would ever want to discriminate, even if they had the legal right to do so. For this reason, some people have described Paul's position as being highly "principled," simply because he takes a basic notion -- the notion that businesses must always be free to do what they wish -- and accepts its implications even in situations where one might wish to make an exception on moral grounds.

There is, in fact, nothing in the public record to support the idea that Rand Paul is a racist, where being "racist" means feeling or expressing an animus toward others on the basis of race. Maddow, in fact, never accused Paul of being a racist, nor should she have. Even so, it is possible to be racially insensitive even without being an outright racist. Saying "Gee, I wish that businesses would not discriminate against you, but I don't think that the country's citizens should be allowed to act through their government to stop you from being discriminated against" is a pretty hollow message to send to the victims of bigotry.

As some African-American commentators have pointed out, the "public accommodations" law is what allowed African-Americans to travel by highway anywhere in the country knowing that they could stop in whatever town they might pass through and use a sanitary toilet. The effect of the civil rights laws, in other words, is not some abstract matter by which the government tries to get people to like each other. It is a matter of preventing the most basic harms and humiliations, as well as of guaranteeing that all citizens will be able to participate fully in the economy and in our democracy. Opposing such laws for non-racist reasons, principled or otherwise, does not make the ultimate effect of such political positions any less harmful to people of disfavored races.

The Continuing Relevance of Civil Rights Law and Debates: Hardly Relics of the Sixties, Such Laws Remain of Vital Importance

The continuing relevance of the civil rights laws -- and the profound implications of the Paul position -- is, in fact, quite easy to see. It is not as if we passed the Civil Rights Act in 1964 and then never thought about racial, or other kinds of, discrimination again. Civil rights issues have been alive and well throughout the time that has passed since 1964, and they continue to arise in the present day.

In a ruling that would likely be shocking to many today, in the 1970's the Supreme Court held that businesses that discriminated in employment against pregnant women were not engaged in sex discrimination. It reasoned that the discrimination was against the physical condition of pregnancy, which the Court found to be merely incidentally related to being a woman. In response, Congress passed the Pregnancy Discrimination Act, making it clear that discrimination against pregnant women is one of the things that the civil rights laws forbid.

The Civil Rights Act of 1991 (covering a variety of issues too numerous to discuss here) was passed twenty-seven years after the 1964 Act. In passing that law, Congress in 1991 was called upon again to clarify what the civil rights laws mean, because new facts and new situations demanded that clarification -- showing that such issues cannot simply be relegated to the Sixties, or any other decade.

Just last year, moreover, the Lilly Ledbetter Fair Pay Act was passed by a Congress that was outraged by a Supreme Court decision that allowed the statute of limitations for filing a complaint to expire even before a person could have known that she was a victim of discrimination.

Even last month, the Supreme Court heard a case regarding the Chicago Fire Department that could, had the Court voted the other way, also have resulted in corrective civil rights legislation.

In sum, the idea that debates about the Civil Rights Act of 1964 are "about the Sixties" is about as accurate as saying, for instance, that the Bill of Rights was "about the 1790's." Congress has been, and will continue to be, called upon to clarify existing law and to determine whether changing times and new difficulties call for further action.

It is almost shocking even to have to say this, but the possibility that we will have someone serving in the Senate who unflinchingly says that such legislation is per se improper is highly relevant to today's -- and tomorrow's -- problems.

The Notion of Business Freedom and the Modern Democratic Party

The prevailing assumption for over three decades in this country has been that businesses should be allowed to do whatever they want, with as little oversight as the public will allow politicians to get away with. That assumption drives some politicians more strongly than others, but there is not a major officeholder in either party who seriously challenges that assumption, at least as a starting point for analysis. We are now seeing the results of that consensus.

Even today, after the recession has graphically and painfully illustrated the perils of mindless deregulatory zeal, virtually every politician's predominant underlying belief is still "Less regulation is better than more regulation."

And this has been the case for a long time now. When a group of so-called centrist (but actually right-of-center) Democrats emerged in the 1980's, they took it as a matter of revealed truth that the regulatory state had gone too far; that President Reagan's desire to "free business from burdensome laws" was basically correct; and that organized labor, in particular, posed an economic problem. Among these New Democrats was Bill Clinton, whose deregulatory accomplishments include the abolition of laws regulating Wall Street.

President Obama: A New Democrat in Practice?

Today, although Barack Obama is not usually identified as a New Democrat, his chief of staff and many other people who are now serving in the White House came up through that very well-funded political organization.

No one, of course, would imagine that President Obama takes the extreme position against business regulation that some on the Right so enthusiastically embrace. Rand Paul, in fact, asserted that Obama's anti-BP comments in the aftermath of the Gulf disaster were "un-American." There is, therefore, a lot of room within which to be "pro-business" in U.S. politics.

Even so, Obama and the vast majority of Democrats too often seem to start from the assumption that being pro-business means being opposed to any regulation that businesses do not like. In theory, being pro-business could mean something as basic as forcing all businesses to operate by the same rules of conduct, to adhere to rules of transparency, and so on. But in practice, today, whether one is a Republican or a Democrat, being in favor of business is directly tied to "freeing" business from government regulation.

In that way, today's Democrats are, in fact, fundamentally like the people who oppose all business regulations on the ground that private ownership implies complete freedom from government-imposed limitations. Democrats, thankfully, still are willing to swallow hard and impose rules -- including the anti-discrimination rules Rand Paul opposes -- on business conduct. But even the most important legislation making its way through a very Democratic Congress -- on topics ranging from health care, to financial regulation, to energy policy -- is hobbled by the positions of the many Democrats (and nearly all Republicans) who agree with the basic Rand Paul position, even though they are not willing to take it nearly as far as Paul himself might.

As I argued in an earlier FindLaw column, however, it is a fool's errand to try to imagine a functioning economy without laws that regulate the activities of business, or without government agencies to interpret and enforce those laws. Yet the "pro-business" stance of Obama and the Democrats, although different in important degree from the position of their opponents, still buys into the idea that "less regulation" is the key to prosperity.

Taking a reflexively pro-business, anti-regulation stance also indicates that those in government share a fundamental trust in the good intentions of those who run businesses -- even though the very laws that set the rules of the road for American capitalism affirmatively require business managers to maximize shareholders' profits and to ignore social welfare and the greater good. Perhaps because of this deep-down trust that business is good and regulation bad, the President was very slow to question the motives -- or the veracity -- of the executives from BP who, we now know, have been continuously lying about the spill and evading accountability for it.

If one's notion of business freedom amounts, in the end, to nothing more than the idea of letting businesspeople have whatever they want, then we are doomed to more of the same. Instead, being in favor of business should again come to mean -- as it once did -- understanding that businesses must operate within carefully-drawn rules, and that it is the government's job to set those rules to reflect the values of the nation's citizens.

Until we change our views, however, being pro-business will continue to mean issuing business a license to recklessly disregard the public interest -- with BP only the most recent poster child for the damage such recklessness can bring.

Neil H. Buchanan, J.D. Ph. D. (economics), is a Visiting Scholar at Cornell Law School, an Associate Professor at The George Washington University Law School, and a former economics professor.

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