Association, Exclusion, Liberty, and the Status Quo

One of my conservative friends keeps telling me that, “The right to associate is the right to exclude.”  As a libertarian, I agree.  But the subtext of his slogan is that libertarians focus far too much on government regulations that abridge the freedom of association – and far too little on government regulations that abridge the freedom of exclusion.  His claim, in fact, is that the only feasible way to protect the freedom to exclude is to restrict the freedom to associate.  Since discrimination laws make it impossible for voluntary contracts to keep foreigners out of a neighborhood, for example, it’s OK for immigration laws to keep foreigners out of the country entirely.

All this suggests one big question: To what extent do existing policies that restrict freedom of association and exclusion actually bind?  In other words, how different would the modern U.S. look if people were free to live, work, and play anywhere if and only if the property owner consented?

Let’s start with exclusion.  Many existing laws restrict the right to refuse to hire workers and serve customers.  In real estate, restrictive covenants and home owners’ associations are common, but if you try to use them for racial exclusion, courts won’t enforce them.  Single-gender clubs also occasionally face lawsuits.

I’m against all of these limitations on the right to exclude, but how much do they actually change behavior in the modern U.S.?  Only slightly, for a long list of reasons. 

1. The law focuses on business.  In dating, marriage, friendship, etc., the law doesn’t even pretend to try to restrict the freedom to exclude.

2. As standard economics of discrimination explains, people who run businesses face intense selection pressure to see only one color: green.  Businesspeople are usually too greedy to want to exercise their freedom to turn away qualified applicants or paying customers.   Unless, of course, workers or customers are willing to pay a premium for segregation…

3. In the modern U.S., however, there’s little demand for segregation.  In fact, demand for segregation is usually negative.  Most American customers would be uncomfortable patronizing a store that turned away blacks or gays.  Existing laws might prevent a small niche market for segregated stores, but that’s about it.

4. Under existing laws, there are still plenty of ways for businesses and other groups to “keep out the riff-raff.”  Charging high prices is the most obvious; as a fancy mall advertised on The Simpsons, “Our prices discriminate because we can’t.”  Restaurants can impose dress codes.  Employers can require educational credentials.  Home owners’ associations can tell everyone how to cut their lawn.  Cult compounds can require all inhabitants to blindly obey the guru.   Etc. In the real world, mildly clever entrepreneurs can still supply workers and customers with almost all the exclusion they’re willing to pay for.

I don’t deny that laws against exclusion occasionally have important effects.  But their main effect in the modern U.S. economy isn’t to reduce exclusion, but to pressure businesses to either overpay or avoid hiring workers who can easily sue for “discrimination.”

Now consider regulations on the freedom of association.  Many are marginal, too.  Not much would change if you legalized gay marriage or polygamy; they’re just niche markets.  But one class of regulations has a massive effect: immigration laws.  Indeed, they probably have a bigger effect than all other regulations combined.

It’s simple.  Billions of people around the world live on a few dollars a day or less.  Under open borders, tens of millions of them would migrate to the U.S. every year.  Remember: Even if you’re an illiterate peasant from Bangladesh, credit markets and/or employers would be happy to front the money for airfare. 

This immigration flow wouldn’t stabilize until real estate prices massively increased and low-skilled wages drastically declined.  The U.S. population could easily increase by 50% in a decade.  New cities would blanket the country.  The level of output would skyrocket – and its composition would rapidly change, too.  Whether you love this vision or hate it, you can’t deny that free association would radically and rapidly reshape the face of America.

I’m as supportive of the right to exclude as anyone.  But current restrictions on this right are pretty minor.  There are plenty of ways for markets to engineer exclusion, and there’s not much demand for greater stringency.  In contrast, restrictions on the right to associate are massive, and there is enormous pent-up demand to migrate.  Hundreds of millions of people want to move here, landlords want to rent to them, employers want to hire them – but the law won’t allow it. 

Contrary to my conservative friend, then, libertarians aren’t the ones with a blind spot.  He is.   While restrictions on exclusion are occasionally irksome, they
rarely ruin lives.  Immigration laws, in contrast, usually condemn
their victims to life – and often early death – in the Third World.  Libertarians rightly emphasize the freedom to associate, because the status quo’s restrictions on exclusion are minor and mild – and the status quo’s restrictions on association are massive and monstrous.

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