An Economic Theory of Whiteness

Section 1: How White Fragility Theory Frames the Problem of Racism

The theory of white fragility sees white people as living in a bubble that insulates them from “race-based stress,” shielding them from the truth about how racism permeates the society in which they live. Racism originates from a history of blatant white profiteering, enabled by a historical and institutional arrangement that disregarded the costs of systemic discrimination against people of color.

Slavery and Jim Crow are no more, but their legacy is alive and well. Implicit bias has little effect on communities in which white people live and work, but it has substantial ongoing effects on the communities in which people of color reside. These disparate impacts have not prevented the overall cultural climate from growing more heated, more precarious and more unpredictable. Though vaguely aware of these disparities, white people feel little, if any, impetus to improve the racialized climate by rooting out implicit biases.

This gives rise to a complacency—white people fail to recognize their implicit biases. The only hope, then, is to raise their awareness of what one paper describes as the core tenets of critical whiteness studies: “the purported invisibility or taken-for-granted nature of white culture and identity; the understanding (or lack thereof) of white privilege; and adherence to colorblind, individualist ideals that may serve to obscure both identity and privilege.” One must therefore submit to indoctrination in the precepts of Whiteness Studies in general, and the theory of white fragility in particular—one of the central precepts of which is that it is impossible for white people to be objective about whether they are responsible for ongoing implicit bias.

The result is a society in which white people are insulated from race-based stress. From the first English colonists, who arrived in Virginia and traded with the slave ships that happened upon their shores, white people have swathed themselves in layers of biases that effectively imposed, and kept them immune from, institutionalized racism, by defining and redefining what it means to be white and allocating resources accordingly. (There is “a continuing debate regarding whether racism against blacks preceded the adoption of a legal system supporting lifetime slavery in Virginia, or whether the practice of slavery triggered the colonists’ racist attitudes.”)

Centuries later, explicit biases have dramatically declined, to be replaced by implicit biases. The bubble in which white people live is more transparent than it was before the Civil Rights era, but there are still persistent unidirectional privileges, bestowed by the implicit and inexorable validation of white experience as normal. Privilege began when the first colonists visibly distinguished themselves from indigenous inhabitants and from the black people brought over on slave ships, and it has evolved over the centuries, as law and custom have identified different ethnic groups as white (see Ian Haney Lopez’ White by Law).

Living in a white bubble leads to what Charles W. Mill calls white ignorance about the nature of white supremacy and the disparate impact of implicit bias which perpetuates systemic racism. This predicament will remain inexorable so long as it remains racialized—which means, for white people, invisible. The aim of white fragility theory is to convince white people to root out implicit bias, and join people of color in a struggle for racial equity. This mission begins with a blunt force campaign. This will not be without cost. It will require an extraordinary effort to transform the polluted land of whiteness into a pure land of racial justice.

Unfortunately, most white people see this as a net-negative or zero-sum game. White people will remain in a state of fragility so long as they erroneously regard these efforts as coming at their expense and as an indictment of their moral character. They must be urged, if not compelled, to cultivate the courage, strength and stamina to get rid of implicit bias. Only then will society have arrived at the conditions necessary, if not sufficient, for racial justice.

In previous essays, I have argued that white fragility theory is a classic Kafka trap, characterized by bullying rhetorical tactics; proselytization; reliance on the dubious premise of implicit bias; serious methodological problems; a confusion of objectivity with neutrality; irresponsible generalizations from anecdotal observations; the reification fallacy, genetic fallacy and other fallacies; circular reasoning; the avoidance of rigorous statistical analysis; a confusion of correlation and causation; and a misunderstanding of the Frankfurt School of Critical Theory. It also gets basic facts of history wrong, including details of the Mexican-American war and the story of Jackie Robinson.

One of its most critical flaws is its reliance on the concept of implicit bias. The theory of white fragility relies crucially on the idea that white people are socialized into a racialized frame of reference that maintains white supremacy by reifying whiteness. This exploitative system can only be overthrown by exposing and eliminating the implicit biases that white people have internalized. However, an April 2019 meta-analysis by psychologists Patrick S. Forscher, Calvin K. Lai, Jordan R. Axt, Charles R. Ebersole, Michelle Herman, Patricia G. Devine and Brian A. Nosek “synthesized evidence from 492 studies (87,418 participants) to investigate the effectiveness of procedures in changing implicit measures” and “evaluated these procedures’ effects on explicit and behavioral measures.” Their “findings suggest that changes in implicit measures are possible, but those changes do not necessarily translate into changes in explicit measures or behavior.” One of the authors has tweeted that he has “started to doubt that implicit bias is an important driver of behavior in the first place,” suggesting that “maybe implicit bias is an epiphenomenon”—in what the same author calls “the ‘scar’ interpretation of implicit bias.” Several other studies have suggested that a definitive consensus as to what implicit bias is and how it relates to systemic social outcomes remains elusive.

But Robin DiAngelo and whiteness scholars and Social Justice activists in general are convinced that white people are so steeped in implicit biases and so hopelessly socialized to believe in ideologies like individualism and objectivity that they cannot see how their actions negatively impact people of color. Hence, articles with titles like “7 White Privileges I Didn’t Realize I Was Enjoying” and “The White Privilege of Not Fearing the Police” and books like White Like Me, White Awake: An Honest Look at What It Means to Be White and The White Racial Frame.

These biases are rooted in whiteness, which is understood as a set of norms, habits, values and beliefs that are invisible to white people, but that re-center and uphold white supremacy (Ian Haney Lopez’s term is “white racial dominance”) and institutional racism. The de-centering of whiteness is thus a key objective in the critical evaluation of social norms and institutions. The central strategy is the deconstruction of white privilege. DiAngelo asserts that white fragility—defined as a condition in which “even a minimum amount of racial stress becomes intolerable, triggering a range of defensive moves”—is a central impediment to the deconstruction of white privilege.

In prior work, I have focused on the erroneous philosophical presuppositions, epistemic limitations and methodological shortcomings of white fragility theory. In this essay, I propose an economic framework that interprets whiteness and white privilege as failures in market design. I argue that white fragility theory poses a substantial transaction cost which undermines the attempt to improve market design and address racial inequality.

In the second section, I examine the argument that whiteness is reified public property that gives rise to white privilege. I draw upon the work of Peggy McIntosh and Lawrence Blum to distinguish between “privileges worth having” and “privileges not worth having.” I conclude that reified whiteness turns “privileges worth having” into club goods for white people (which they should not be) rather than public goods for everyone (which they should be), while “privileges not worth having” are, depending on the context, either public bads or tort harms, which arise in a society characterized by systemic racial inequality. In other words, whiteness is a property right for white people, which gives rise to inefficiencies associated with public goods, public bads and torts.

In the third and fourth sections, I explain in more detail how whiteness as public property can be understood as the outcome of an implicit social contract, formed by white ancestors and maintained by white contemporaries, that fails to adequately address the problems of public goods, public bads, and tort harms that arise in a context of systemic racial inequality.

In the fifth section, I draw on an analysis of the “political Coase theorem” by Daron Acemoglu, to present the national conversation about structural racial inequality as a collective negotiation about policies and institutional reforms, designed to address the historical and current ramifications of whiteness as reified public property. I explain how white fragility theory—rather than white fragility—imposes a substantial transaction cost, which impedes the progress of this national conversation.

Section 2: The Theory of Whiteness and White Privilege

Whiteness as Property

In her seminal paper on white privilege, Peggy McIntosh writes:

I have come to see white privilege as an invisible package of unearned assets that I can count on cashing in each day, but about which I was “meant” to remain oblivious. White privilege is like an invisible weightless knapsack of special provisions, assurances, tools, maps, guides, codebooks, passports, visas, clothes, compass, emergency gear, and blank checks.

According to pioneering whiteness scholar Ruth Frankenberg, white privilege is (1) a location of structural advantage, of race privilege; (2) a standpoint, a place from which white people look at themselves, others and society; and (3) a set of cultural practices that are usually unmarked and unnamed. Robin DiAngelo, the sociologist who coined the term white fragility, elaborates:

Whiteness is thus conceptualized as a constellation of processes and practices rather than as a discrete entity (i.e. skin color). Whiteness is dynamic, relational, and operating at all times and on myriad levels. These processes and practices include basic rights, values, beliefs, perspectives and experiences purported to be commonly shared by all but which are actually only consistently afforded to white people. Whiteness Studies begin with the premise that racism and white privilege exist in both traditional and modern forms, and rather than work to prove its existence, work to reveal it [emphasis mine].

I have argued elsewhere that this is an example of the reification fallacy and, by assuming what it seeks to reveal, it begs the question. Nonetheless, the a priori definition of white privilege as an invisible package of unearned assets, which white people can count on cashing in each day, casts whiteness as a form of institutionalized public property owned by white people, the value of which lies in the privileges bestowed to people with white skin, from which people of color are excluded.

The idea of reification, though logically fallacious, is a metaphorical way of depicting how an idea—like whiteness—can be “made into a real thing.” It doesn’t matter that legal discrimination has ended; that there has been a dramatic decline in explicit bias among white people; that white guilt among progressives may explain why “surveys show that white liberals in Iowa and New Hampshire are less inclined to support” Joe Biden for president, even though Biden holds “a commanding lead in national polls with nonwhite Democrats”; and that, as a recent article spells out, “white progressives insist on spreading the gospel of white privilege.” Reification, as defined by György Lukács in History and Class Consciousness, is “a relation between people [that] takes on the character of a thing and thus acquires a ‘phantom objectivity,’ an autonomy that seems so strictly rational and all-embracing as to conceal every trace of its fundamental nature: the relation between people.”

Whiteness continues to be reified through a set of ideological and discursive norms, habits, values and beliefs that come from history, generating ongoing privileges for white people, at the expense of people of color. In her Harvard Law Review article, “Whiteness as Property,” published five years after McIntosh’s essay, Cheryl Harris defines whiteness as “constituted through the reification of expectations in the continued right of white-dominated institutions to control the legal meaning of group identity.” Moreover, “Whiteness as property is derived from the deep historical roots of systematic white supremacy that has given rise to definitions of group identity predicated on the racial subordination of the ‘other,’ and that has reified expectations of continued white privilege.” For Harris, whiteness, i.e. having white skin, is a form of property, reified historically by law and custom, and this “property interest in whiteness has proven to be resilient and adaptive to new conditions:”

Over time it has changed in form, but it has retained its essential exclusionary [emphasis mine] character and continued to distort outcomes of legal disputes by favoring and protecting settled expectations of white privilege. The law expresses the dominant conception of “rights,” “equality,” “property,” “neutrality,” and “power”: rights mean shields from interference; equality means formal equality; property means the settled expectations [emphasis mine] that are to be protected; neutrality means the existing distribution, which is natural; and, power is the mechanism for guarding all of this.

Having white skin amounts to the possession of property that signifies a white person’s “location of structural advantage” within “a constellation of processes and practices,” which include “basic rights, values, beliefs, perspectives and experiences purported to be commonly shared by all, but which are actually only consistently afforded to white people.” Whiteness, in other words, is a publicly owned property of white people as a collective body and endows white people with the “invisible package of unearned assets” that Peggy McIntosh calls “white privilege.”

White Privilege: An Ambiguous Concept in Need of Refinement

This formulation presupposes that we can identify the specific benefits granted by this invisible package of unearned assets. But given concept creep, prevalence-induced concept change and the problem of monocausality—as explored in two recent articles on white privilege—the systemic benefits conferred by privilege are not obvious. Nor is it obvious if and when privilege is manifest in any given context. This indeterminacy gives rise to the search costs associated with figuring out whether any specific social interaction is—or is not—a manifestation of white privilege.

Elsewhere, I analyze a New York Times interview with sociologist Michael Eric Dyson. In the interview, Dyson recalls seeing a drunk white kid harassing a police officer outside Ben’s Chili Bowl on U Street in Washington, D.C. (a center of the capital’s nightlife), and describes being immediately seized with dread that the officer might pull out his gun, before realizing that his fears were unwarranted because the kid was white. Dyson’s basic point, I write, seems to be that, “[i]n getting off easy, the drunk white kid ‘cashed in’ an asset from his ‘white privilege’ account, and was spared the injustice of police abuse because he is white … A black kid, however, would not be so lucky.” But, as I explain, it is not obvious that the drunk white kid got off easy simply because he was white. Dyson’s claim demonstrates confirmation bias and omitted variable bias.

Crucially, Dyson’s claim is based on counterfactuals. That is, we don’t know if a different police officer might have acted differently, or if the same police officer would have acted differently on a different night, or if he would have acted differently if the drunk kid were black. We also don’t know the reason, or reasons, that stopped the police officer, at that moment, from drawing his gun.

Similarly, McIntosh presents a list of forty-six examples of white privilege, including “I can be reasonably sure that my neighbors in [a white] location will be neutral or pleasant to me” and “I can go shopping alone most of the time, fairly well assured that I will not be followed or harassed by store detectives.” But one cannot know for certain that any specific white person will not encounter hostile neighbors or will not be followed by a store detective. The words “reasonably sure” and “fairly well assured” suggest that white privilege is probabilistic. To assume what is true on average is true in all cases is to commit the ecological fallacy.

Though in practice it can prove exceedingly difficult to determine whether white privilege is at work in any given social interaction, we can arrive at a general conception of white privilege. McIntosh draws a distinction between the positive advantages and negative advantages that stem from privilege:

We might at least start by distinguishing between positive advantages that we can work to spread, to the point where they are not advantages at all but simply part of the normal civic and social fabric, and negative types of advantage that unless rejected will always reinforce our present hierarchies. For example, the positive “privilege” of belonging, the feeling that one belongs within the human circle, as Native Americans say, fosters development and should not be seen as a privilege for a few. It is, let us say, an entitlement that none of us should have to earn; ideally it is an unearned entitlement. At present, since only a few have it, it is an unearned advantage for them. The negative “privilege” that gave me cultural permission not to take darker-skinned Others seriously can be seen as arbitrarily conferred dominance and should not be desirable for anyone.

In his mild critique of white privilege theory, moral philosopher Lawrence Blum refines this point by distinguishing between “privileges worth having” and “privileges not worth having.” The former can be divided into (1) “spared injustice” privileges and (2) other privileges unrelated to injustice, while the latter are “unjust enrichment” privileges.

“Spared injustice” privilege manifests when “a person of color suffer[s] an unjust treatment of some kind while a White person does not.” For example, “[t]he White person is spared the injustice of discrimination,” as when “a Black person is stopped by the police without due cause but a White person is not.” Blum writes, “[i]n this case the privilege is simply in being spared an injustice suffered by the person of color, but without further benefiting from that injustice.”

“Non-injustice-related” privilege manifests “when one benefits from one’s position, in a manner that one does not deserve from a moral point of view, but, in contrast to the previous two categories, the benefit is not related to an injustice suffered by the disadvantaged group.” Blum gives the example of a “linguistic privilege” that arises from being a native speaker of a national language. Though there can be “discrimination against persons with ‘accents’ of various kinds, or violation of rights that should be independent of native language, such as voting rights or receiving of public services … some advantages of being a native speaker do not involve discrimination.” Even among native speakers, using proper grammar can give rise to non-injustice-related privileges. Similar privileges can arise from majority/minority dynamics:

Consider the informal cultures of workplaces and professions. These cultures tend to have a partly ethno-cultural character, so that members of some ethnic or racial groups find them more comfortable than do others. In the USA, this tilt is usually toward Whites. These biases have historically been shaped by exclusion, and in that respect are unjust … [But in] a perhaps utopian future in which the historical injustices have been rectified … [o]ne can imagine that some degree of ethnic bias in workplace culture would still remain, simply because of a majority/minority dynamic. If every racial group were represented in a given workplace in proportion to its numbers in the wider population, there might still be a comfort factor that favored White people, simply because of being the majority group. This would be a kind of unearned privilege not founded on injustice.

Finally, there is “unjust enrichment.” According to Blum, “the system of White privilege is so deeply entrenched in American life, institutions and history” that “it is difficult for Whites to escape unjust enrichment.” Thus, “[w]hen Blacks are denied access to desirable homes, for example, this is not just an injustice to Blacks but a positive benefit to Whites who now have a wider range of domicile options than they would have if Blacks had equal access to housing.” Moreover, “[w]hen urban schools do a poor job of educating their Latino/a and Black students, this benefits Whites in the sense that it unjustly advantages them in the competition for higher levels of education and jobs.”

In sum, privileges worth having are more like rights that should be expanded to people of color, rather than entitlements that should be taken away from white people. As Lewis Gordon writes:

A privilege is something that not everyone needs, but a right is the opposite. Given this distinction, an insidious dimension of the white-privilege argument emerges. It requires condemning whites for possessing, in the concrete, features of contemporary life that should be available to all, and if this is correct, how can whites be expected to give up such things?

Privileges not worth having are more like a set of immunities and exclusionary practices that unjustly enrich whites at the expense of people of color. Unjust enrichment is the result of implicit biases, which pollute the communities in which people of color reside by reifying white hegemony of social institutions. Residential segregation, educational disparities and biased white juries, who exonerate guilty white people and convict innocent black people, are examples of privileges not worth having.

The Market Failures of White Privilege

Both sets of privileges are market failures, resulting from an implicit social contract that reifies whiteness as public property. The distinction between privileges worth having and privileges not worth having corresponds to the economic distinction between public goods and public bads. But many “privileges worth having,” such as alignment with workplace norms or the ability to get on well with one’s neighbors, function in practice like club goods: collective, but neither purely private nor purely public. Like gyms, country clubs and swimming pools, which are available only to a community of people who pay a membership fee, whiteness as reified public property gives rise to exclusive communities. White people can “buy” their way into certain “clubs”—e.g. segregated residential communities or majority cultures in workplaces. White privilege is a package of assets with which white people secure the benefits of membership in the club of whiteness, from which people of color are excluded for want of such currency.

Finally, white privilege can be understood in terms of torts. For example, “spared injustice” privilege implies that the probability of being followed by a store detective or abused by the police is lower for white people than for people of color. The cost of anxiety, caused by being followed by a store detective or ill-treated by the police, is like a tort. The economic analysis of torts is concerned with the implementation of liability rules, which encourage potential offenders to exercise efficient levels of precaution, such that white people and people of color are “spared injustice” with equally high probability.

Section 3: The Economics of Whiteness and White Privilege

Public Goods

Economists define a public good as one that is non-rivalrous and non-excludable. A good is non-rivalrous if one person’s consumption of the good does not deplete the amount available for consumption by others. It is non-excludable if it is prohibitively costly to exclude people from consumption of the good. Classic examples are clean air and national defense. Once available, it is difficult, if not impossible, to charge a price for consumption because the marginal willingness to pay for some unit of the good cannot be easily determined, and it is prohibitively costly to exclude people from consumption. Private goods, by contrast, are both rivalrous and excludable.

Spared-injustice privileges and non-injustice-related privileges, as defined by Blum, are public goods. The privilege of being spared injustices, such as discriminatory treatment by an authority figure, need not come at the expense of others. For example, a police officer who watches two cars drive by simultaneously—both observing the speed limit and complying with traffic laws—can decide not to stop either of them. Both drivers are thereby spared injustice at the same time. Similarly, the privilege of being a member of the majority, or being a native speaker of the local language, does not come at the expense of other members of the majority or native speakers. All else being equal, everyone who speaks the national language, or is a member of the majority, garners respect, comfort and a sense of belonging at the same time. Everyone fits in.

However, these privileges require an institutional arrangement that endows society with the norms, habits, practices, beliefs and values that ensure that everyone can generally expect to be spared injustice. This institutional arrangement requires ongoing maintenance. The norms that underlie and reinforce a majority culture or national language should ensure that minorities and non-native speakers, who are not direct beneficiaries of the corresponding non-injustice-related privileges, can generally expect to be treated fairly and equally by native speakers and members of the majority group.

Nevertheless, even in a society with well-designed institutions, one can expect instances of ill treatment. Human imperfection means that justice will not always prevail, nor can privilege be guaranteed under all circumstances. Society incurs costs in setting up and maintaining its institutional arrangement. Police must be trained to treat everyone impartially. Courts must have procedures to facilitate the administration of justice. Schools must abide by rigorous standards, while accommodating special needs and avoiding discrimination. Workplaces must uphold standards that promote productive economic activity, without compromising constructive cultural engagement. Community organizations must equitably deploy resources. Settled residents must have incentives to welcome new families into the neighborhood.

Institutional integrity thus depends on human behavior. Institutions must be well designed and have sufficient resources to carry out their missions. But their design, implementation and everyday application depend on citizens’ good faith commitment to justice. Constitutions can be written and legislation passed. But police officers, judges, juries, teachers, firms, community organizers, residents and others must all do their part. The public good of privilege depends on quotidian human effort.

As with other public goods (e.g. law enforcement), the optimal social endowment of privilege equates the marginal willingness of each citizen to pay for collective “privileges worth having” with the marginal cost of ensuring that society endows this level of privilege. “Privileges worth having” are earned privileges, rather than, as Peggy McIntosh describes them in her seminal paper, “unearned entitlements” that “none of us should have to earn.” “Privileges worth having” are a public good for which people should be willing to pay.

But what does it mean to pay? A marginal willingness to pay for “privileges worth having” can be expressed in terms of the human effort that is necessary and sufficient to ensure a just institutional arrangement. For example, police officers, judges, juries, teachers, human resource professionals, community organizers and citizens in general should all do their part to ensure that people are “spared injustice” and enjoy the benefits of non-injustice-related privileges, if only because a collective commitment to such “privileges worth having” benefits everyone—including police officers, judges, juries, teachers, human resource professionals, community organizers, neighbors and other citizens.

“Spared injustice” and “non-injustice-related” privileges must be earned in the sense that the institutional arrangement that ensures these privileges, to a reasonable degree, can only survive as long as all members of society assume responsibility for upholding this institutional arrangement. The marginal cost of ensuring “privileges worth having” is thus a “civic duty”: first, the citizens must collectively set up the just and fair institutional arrangement (form the social contract); second, develop effective social and economic policies; and third, ensure their ongoing survival by each fulfilling her “civic duty.”

The problem with public goods is that free riding can occur if citizens expect others to fulfill their civic duty but fail to do so themselves. The marginal cost of a citizen fulfilling her duty outweighs the marginal benefit derived from others doing their duty. Even if anyone who moves into a new neighborhood faces the same (low) probability of hostility from neighbors (as opposed to the current situation in which a black person faces a higher probability of not being welcomed into the neighborhood), any particular individual may not feel compelled to ensure that new neighbors are welcomed. He may expect to be well treated himself, but may not pay for this treatment by putting in the effort to ensure others are also well treated (there are plenty of killjoys, grumps, curmudgeons and misanthropes in the world). Similarly, a police officer may not feel compelled to treat everyone impartially if she is having a bad day, or does not believe that her own unprofessional behavior will stop others from treating her impartially.

This is a calculation made by each individual. The marginal benefit of each additional unit of “civic duty” exceeds the marginal cost up to the optimal point. But the provision of public goods generates “positive externalities”— each additional unit of civic duty ensures the institutional provision of privileges worth having. Everyone benefits. That is, the social marginal benefit of each additional unit of “civic duty” exceeds the social marginal cost up to the optimal point. But, likewise, everyone must fulfill their civic duty in order to ensure provision of that additional unit of “privileges worth having”, whereas, with private goods, the person who consumes the additional unit pays for it. With public goods, everyone benefits from each additional unit of “civic duty” production—but only if everyone reveals a marginal willingness to pay by fulfilling their civic duty.

It is exceedingly difficult, if not impossible, to determine each person’s marginal willingness to pay for a public good. How much effort is a particular person willing to exert to ensure that institutions are set up or reformed such that society provides an optimal endowment of privilege? Once the institutional arrangement is set up, one can free ride on the arrangement. Many people are happy to be treated well by others, but feel no special obligation, or incentive, to “do unto others as you would have done unto you.” Free-riding functions as a lack of commitment to civic duty. For many people, the incremental cost of performing one’s civic duty outweighs the incremental benefit of being well treated by everyone else, fulfilling their duty (just as the marginal cost of voting may outweigh the marginal benefit of democratically electing a leader). The ideal institutional arrangement, therefore, in which everyone enjoys privileges worth having and “earns” them by performing “civic duty,” breaks down—whether during social contract formation, social and economic policy development or everyday social interactions.

Free riding may not lead to a complete institutional breakdown, since marginal willingness to pay—i.e. to fulfill one’s civic duty—differs among individuals. The probability that any particular person will fail to fulfill her duty is probably not always 100%. But free riding will likely lead to a less than optimal provision of privileges worth having. In order to meet the costs, society must motivate citizens to reveal their marginal willingness to pay for these “services.” In practice, this means that society must motivate people to fulfill their civic duty. In classic cases such as national defense, society collects taxes to pay for the provision of public goods. Here, progressive taxation is often recommended, because public goods are normal goods (i.e. people with more income demand more of the public good). America’s founding fathers formed a Constitution that guaranteed to its citizenry certain inalienable rights (privileges worth having), designed to spare its citizens the injustices of oppressive government. It incurred great costs in terms of the American revolutionary war and the formidable “transaction costs” associated with developing a constitution on which the Founding Fathers and the body politic could agree.

Privileges worth having become non-rivalrous once the institutions necessary to secure their worth have been established. In the US, the system did not break down at the stage of social contract formation—presumably because people revealed their marginal willingness to pay by going to war to secure freedom from imperial rule. Subsequent events in American history, such as the Jacksonian expansion of suffrage (to all white men), demonstrated the substantial costs of developing the social and economic policy necessary to spare citizens the injustice of not being able to vote because they did not own property. Once voting privileges were institutionalized, everyone benefited, as long as enough people fulfilled their civic duty to vote.

Of course, constitutional rights were originally confined to white men. American society “discovered” a way for institutions to ensure privileges worth having for white people by making these privileges excludable for non-white people. Racism institutionalized the practice of excluding privileges worth having from non-white people. Whiteness made privilege available to white men at relatively low marginal cost, or allowed them to free ride on the denial of privileges to non-white people (and women). Stated differently, reified whiteness led to a socially inefficient provision of privileges worth having. Though Civil Rights legislation brought an end to official discrimination, a white person is still more likely to be spared injustice and enjoy non-injustice-related privileges than a non-white person. She need only fulfill her civic duty to white people—rather than to all people. In sum, whiteness resulted in a socially inefficient provision of “public good” privileges.

White Privilege: A Club Good That Should Be a Public Good

Some non-excludable goods are rivalrous, and some non-rivalrous goods are excludable. One example of the former is the tragedy of the commons. One example of the latter is broadcast television. Once a show is on broadcast television, it can be viewed by anyone with a television. But, if the show is pay-per-view, the show becomes excludable. Whiteness is another example. White people do not benefit from whiteness at the expense of other white people (it is non-rivalrous), but people of color are excluded from the benefits of whiteness by virtue of not being white (excludable). In such situations, a public good is a hybrid good: it is a common good if non-excludable and rivalrous; it is a collective good if non-rivalrous and excludable.

Club goods are a category of collective goods. The economic theory of clubs was originally developed in a paper by James Buchanan. Buchanan expands on Paul Samuelson’s “sharp conceptual distinction … between those goods and services that are ‘purely private’ and those that are ‘purely public’” to develop a general theory, “which covers the whole spectrum of ownership-consumption possibilities, ranging from the purely private or individualized activity on the one hand to purely public or collectivized activity on the other.” The theory of clubs is “a theory of co-operative membership,” which includes “as a variable to be determined the extension of ownership-consumption rights over differing numbers of persons.”

In contrast to purely private or purely public goods, club goods are “available for consumption to the whole membership unit of which the reference individual is a member.” The essential feature of a club good is that members of the club share the good—a country club’s golf course, a community center’s swimming pool or a gym’s exercise equipment. The good is available to all members of the club, but “the utility that an individual receives from its consumption depends upon the number of other persons with whom he must share its benefits.” Efficiency requires not only equating the marginal benefit and marginal cost at an optimal level of production of the good, but also requires equating the marginal benefit of some amount of the good with the marginal cost of allowing another person into the club in which the good can be consumed.

As the size of a “club” increases, the number of “members” at which congestion becomes a problem also increases. As Buchanan writes, “[t]his reflects the fact that, normally for the type of good considered in this example, there will exist a complementary rather than a substitute relationship between increasing the quantity of the good and increasing the size of the sharing group.” At some point, a club good may become a public good—an indivisible good, available to everyone. The total benefit per person does not increase or decrease at a rate influenced by the number of consumers and there is no congestion. (This is the case with national defense). As Buchanan writes, there is an “equilibrium only with respect to goods quantity [that] can be reached, defined with respect to the all-inclusive finite group.” Congestion may be “possible over small sizes of facility, but, if an equilibrium quantity is provided, there is no congestion, and, in fact, there remain economies of scale in club size.”

Ultimately, Buchanan writes, “[w]hether or not a particular good is purely private, purely public, or somewhere between these extremes” depends on the number of people who consume the good in equilibrium. When the number of consumers is small, the good is largely private. When the number is big, the good is largely public. A public good is one for which “the all-inclusive club remains too small.”

Whiteness as public property results in a socially inefficient provision of privileges worth having. The benefits associated with “privileges worth having” have been club goods for white people, rather than public goods for everyone. Like gyms, country clubs and community centers with swimming pools, which are available only to those who pay a membership fee, whiteness as reified public property gave rise to exclusive communities, allowing white people the benefits of membership in the club of whiteness.

The historical institutionalization of racism made “privileges worth having” excludable, since only white people were able to “buy” them, by “cashing in” an asset from their “white privilege accounts” – or alternatively, by failing to fulfill their civic duty to non-white people. The social contract, formed by white ancestors and maintained by white contemporaries, “reified” whiteness as public property. Racism thus allowed white people to free ride by failing to fulfill their civic duty to non-white people, turning what should have been a public good into a club good for white people only. Racism is a failure in market design, resulting in inefficient provision of a public good. The national conversation on race relations should focus on developing incentives to motivate white people to fulfill their civic duty, to ensure that privileges worth having are public goods for everyone, rather than club goods for white people only. Privileges worth having are a public good for which “the all-inclusive club remains too small.”

Section 4: The Economics of Whiteness and White Privilege

Public Bads

A public bad is like the noise produced by a wind turbine company: it is a public nuisance, whose cost is born by nearby residents, rather than by the company itself. Economists call this a negative externality. Such public bads do not affect the firm’s profit. Similarly, in the case of unjust enrichment, white privilege comes at the expense of people of color, but white people have no incentive to alter their consumption of privilege because only people of color incur the marginal cost of unjust enrichment. For example, if an innocent black person is found guilty of a crime by a biased jury, the guilty white person thereby exonerated is unjustly enriched, at a cost to the innocent black person.

Unjust enrichment is a privilege not worth having. As Professor Blum writes, “the system of White privilege is so deeply entrenched in American life, institutions and history” that “it is difficult for Whites to escape unjust enrichment.” One can analyze “systemic racial inequality” in terms of utility maximization in consumer theory. The study of “systemic racial inequality” typically focuses on socioeconomic metrics, such as income. But Whiteness Studies and white fragility theory perceive socioeconomic measures of inequality as symptomatic, rather than diagnostic. Racial inequality encompasses a far broader set of realities, with historical roots in norms, habits, beliefs and practices that place whiteness at the center of social and cultural life. Racial inequality in income and wealth must be addressed by de-centering whiteness—the principal or sole explanation of all systemic disparities in the experiences of white and black people: in their interactions with the law, police officers, doctors, recruiters, bosses, colleagues, teachers, neighbors, political representatives, store managers, cashiers, coaches, teammates, cultural media and so on.

Despite the shortcomings of monocausality (discussed in these articles) in positing this whiteness paradigm, it is not unrealistic to expect that the life experiences of white and black people will be systematically different. Given white privilege, if the utility of life experiences could be quantified, a higher value would be associated with the average white person than with the average black person. This means that the utility maximization calculus generates an optimal “utility” derived from the consumption of goods and services over a lifetime—happiness as a function of “life experience.” Furthermore, even if this average difference does not increase, it does not decline over time. Racial inequality is structural in the sense that utility (i.e. happiness) is higher for the average white person than for the average black person and this inequality persists over time.

Consider an average white consumer and an average black consumer, each attempting to maximize utility over a lifetime, where utility is a function of consumption of a bundle of goods, services and “unjust enrichment” privileges. The average black consumer’s utility does not depend on his own consumption of “unjust enrichment” privileges, but on that of the average white consumer. The black consumer’s utility is inversely proportional to the white person’s consumption of “unjust enrichment” privileges. As Blum writes, “[w]hen Blacks are denied access to desirable homes, for example, this is not just an injustice to Blacks but a positive benefit to Whites who now have a wider range of domicile options than they would have if Blacks had equal access to housing.”

This means that the black consumer’s utility rises or falls in inverse proportion to the white consumer’s consumption of “unjust enrichment” privileges. If a white consumer enjoys “a wider range of domicile options” because the black consumer does not have equal access to housing, the black consumer’s utility falls, while utility for the white consumer rises. This is not unlike the decline in utility experienced by someone who suffers from the second-hand smoke emitted by another person, whose utility increases as a result of smoking a cigarette. The white person, like the smoker, does not internalize the cost of enjoying “unjust enrichment” privilege. His consumption of “unjust enrichment” privilege, like the smoker’s consumption of cigarettes, creates a negative externality.

Notice that the white consumer’s utility derived from consumption of “unjust enrichment” privilege comes at the expense of the black consumer, but not at that of the white consumer. Thus, “unjust enrichment” privilege is like smoking. It is an externality with consequences for many people. It is a public bad. Like a public good, a public bad can be non-rivalrous and non-excludable. “Unjust enrichment” privilege is more akin to a collective bad. Consider the analogy with smoking. Smoking creates second-hand smoke, which is non-rivalrous in the sense that many non-smokers in its vicinity suffer all at once, just as the “wider range of domicile options” for the white consumer benefits white consumers collectively (on average), while harming black consumers collectively (on average). The average white consumer does not internalize the cost of privilege for the average black consumer by fulfilling his “civic duty” to ensure that the average black consumer has equal access to desirable homes.

In cases involving public bads, compensation for damages incurred as a result of negative externalities can be a more efficient remedy than injunctions, because of the number of people involved. An injunction provides an incentive for the parties involved to privately negotiate a solution, but in the case of public bads, collective bargaining may be too costly. The courts can intervene to determine the damages that arise as a result of the externality. The debate about reparations, for example, is a debate about how to determine and calculate the damages associated with “unjust enrichment” privileges. The debate itself is costly, given that that it involves millions of people discussing damages incurred across many generations.

Determining the correct amount of damages is complex, if only because it is dependent on assessing a but-for world, in which the externalities suffered by non-white people as a result of “unjust enrichment” privilege did not occur. And first we must be able to begin, and sustain, the conversation. But, as the controversies surrounding reparations in particular and race relations in general show, the transaction costs of resolving disputes about the damages arising from “unjust enrichment” privilege are exceedingly high. As the Coase theorem explains, when the transaction costs of negotiation exceed the gains, dispute resolution breaks down.

Torts and Efficient Precaution

Human imperfection implies that even an optimal institutional arrangement cannot be expected to eliminate abuses altogether. We can only seek to minimize the probability that people will encounter ill treatment. In other words, we seek to maximize the privileges worth having—“spared injustice” and “non-injustice-related” privileges—and to minimize the privileges of “unjust enrichment,” which are not worth having.

The optimum institutional arrangement for this has failed to materialize in America. As I explain here, invoking the law of large numbers and Bayesian analysis, privilege can be understood in terms of systemic discrimination since, while “[e]very individual has a different experience and every experience is subject to varying interpretations,” privilege means “that, on average, the black person can expect to encounter difficulties that a white person does not based on the color of his or her skin.” The national conversation on race relations and racial justice should focus both on developing an institutional arrangement that eliminates this disparity in probabilities, and on minimizing the probability of harm altogether for everyone.

The conversation might also focus on remedies for past wrongs that stemmed from these disparities, and for ongoing wrongs, which occur as a result of human imperfection. White privilege can be understood in terms of torts.

According to Robert Cooter and Thomas Ulen, tort law addresses “harm for which the laws of contracts and property offer no remedy.” Tort law thus applies to racial justice because, for much of American history, the implicit social contract underlying American institutions has not sufficiently guaranteed protection from, and redress for, the harms stemming from not being spared injustice, or not being well treated by people who benefit from majority/minority dynamics or other “non-injustice-related” privileges.

As a matter of economics, the first thing we must address is the incentives that result in efficient or inefficient levels of precaution, designed to prevent “accidents,” or actions that result in harm. The more precaution taken by a victim or perpetrator, the less likely an “accident” is to occur. For much of American history, people of color were burdened with having to take sufficient precautions to avoid conflicts with institutional representatives, such as police officers, that might result in harm. This is akin to a no liability rule: i.e. a situation in which the perpetrator is not legally liable for harm and the onus is on the victim to take sufficient levels of precaution, e.g. by avoiding certain behaviors around police officers that a white person could undertake without fear of retaliation, to minimize the probability of harm. Alternatively, strict liability rules that mandate compensatory damages provide an incentive for the perpetrator to take precautions that minimize the probability of harm.

In real life, it is often unclear who is at fault. Society must arrange incentives for both potential perpetrators and victims to take efficient precautions. For example, a police officer must not assume the worst if a black driver she has pulled over expresses frustration, while the black driver must understand that an officer must follow protocol as part of her duty. In such cases, Cooter and Ulen explain, negligence rules mandating compensatory damages can provide efficient incentives for both parties. A party is liable only if he neglects to take sufficient precautions to avoid harm. The national conversation about race relations must focus on cultivating incentives for everyone to take efficient levels of precaution in their social interactions, in order to ensure that other people are spared injustice and ill treatment in a context of majority/minority dynamics.

Section 5: How White Fragility Theory Undermines the Pursuit of Racial Justice

The Political Coase Theorem

The Coase theorem claims that the legal assignment of property rights is immaterial. Disputes over property rights can be efficiently resolved as a result of private bargaining between the parties involved. The textbook Coase story considers a conflict involving externalities that result from the exercise of property rights, such as the effects of pollution by a firm on a nearby residential community. If transaction costs are low, private bargaining between the parties results in the same outcome, regardless of which side wins the property rights in court, though who wins the rights can affect transfers of money.

For example, as Jodi Beggs suggests, consider a conflict between a wind turbine company and nearby residents, who resent the noise that results from operating the turbine. Since the company probably values the operation of the turbine more than the residents value quiet, the company will pay residents for the right to continue operation if the courts rule in favor of the residents on the question of who owns the property rights. Conversely, if the courts bestow property rights on the company, the company will continue operation and probably will not pay residents because “the households aren’t willing to pay enough to convince the turbine company to cease operation.” Thus, “the assignment of rights … [doesn’t] affect the outcome once the opportunity to bargain [is] introduced, but the property rights [do] affect the transfers of money between the two parties.”

In a paper on the “political Coase theorem,” economist Daron Acemoglu explains that “[a]n extension of this reasoning to the political sphere suggests that political and economic transactions create a strong tendency towards policies and institutions that achieve the best outcomes given the varying needs and requirements of societies, irrespective of who, or which social group, has political power.” Thus, “policy and institutional differences are not the major determinant of the differences in economic outcomes, because societies choose, at least approximately, the appropriate policies and institutions for their conditions.” In a modified version of this theory, “societies may choose different policies, with very different implications, because they or their leaders disagree about what would be good for the society (“theories of belief differences”).

Unlike a pure or modified political Coase theorem, “theories of social conflict” claim that “societies choose different policies, some of which are disastrous for their citizens, because those decisions are made by political or politically powerful social groups that are interested in maximizing their own payoffs, not aggregate output or social welfare.” This inherent conflict arises whether “internal conflict within the society leads to inefficient choices” or “inefficient institutions and policies are imposed on societies from the outside, e.g. by colonial powers.” This result contrasts with the prediction, under a standard application of the Coase theorem to politics, that efficient socioeconomic outcomes and redistribution of gains can arise from political and economic transactions among social groups, regardless of which group holds political power. It is not conflict among groups that accounts for suboptimal outcomes, but disagreements about the efficacy of policies and institutional arrangements.

Acemoglu’s analysis implies that “conflicts of interest between different social groups” impede political bargaining over the development of efficient policies and institutions because “parties holding political power cannot make commitments to bind their future actions because there is no outside agency with the coercive capacity to enforce such arrangements,” as is assumed to be the case in a standard Coase model of contractual negotiation between private parties, in which a third party, e.g. the state, enforces contracts. Thus, inefficient outcomes and the absence of corrective policies arise because groups in power lack sufficient commitment to ensure the enforcement of the social contract. This lack of commitment represents a prohibitive transaction cost.

How the Theory of White Fragility Obstructs the Pursuit of Racial Justice

Acemoglu’s analysis implies that a failure of the political Coase theorem is the result of either (1) factional differences over the efficacy of various policies, or (2) factional conflicts between social groups, which persist because the dominant social group “holding political power cannot make commitments to bind their future actions because there is no outside agency with the coercive capacity to enforce such arrangements.” Under (2), the lack of commitment is a sufficiently large transaction cost to preclude the collective bargaining necessary to maximize privileges worth having, minimize privileges not worth having and establish rules to minimize the impact of racialized tort harms. This is the claim made by the theory of white fragility.

In this view, white fragility perpetuates white complicity, which rejects any exhortation to address racial justice. White fragility functions as a lack of commitment to racial justice. Defined as a condition in which “even a minimum amount of racial stress becomes intolerable, triggering a range of defensive moves,” white fragility purportedly causes white people to perceive conversations about “institutional” racism and white moral responsibility as an inconvenience at best and a hindrance at worst. The perpetuation of racial inequality is the result of a commitment problem. White people, the dominant social group, are unwilling to part with the institutional privileges that arise from being white in a society in which whiteness is reified property. Controlling the levers of institutional power, white people refuse to commit to the deconstruction of white privilege because they perceive the costs of the behavioral changes, policies and institutional reforms that might arise from such conversations as outweighing any gains to themselves or to people of color. The cost of fulfilling their civic duty to everyone outweighs the benefits. If, for example, they signed off on policies to turn a club good into a public good, the absence of a neutral third party to enforce implementation would cause a breakdown in commitment.

There is an alternative view. The political Coase theorem breaks down under (1), factional differences about the efficacy of various policies. The theory of white fragility, rather than white fragility itself, then imposes a substantial transaction cost, which militates against progress in resolving policy disputes and addressing systemic racial inequality. The fatal flaw in DiAngelo’s theory is that it is plausible only if there is a widespread explicit effort by white people to retain control of institutional privilege, at the expense of people of color, or if implicit bias obstructs an otherwise well-intended commitment to the expansion of privileges worth having and the deconstruction of privileges not worth having—i.e. racial justice.

But neither hypothesis holds up well under examination. First, changes in implicit bias do not necessarily lead to changes in explicit behavior. Second, explicit preferences for discrimination against blacks have declined dramatically among whites over the past half-century. Third, if white guilt among progressives is any indication, many white people are willing to put in the effort to ensure that non-white people are “spared injustice” and not victimized by “non-injustice-related” privileges. They are also quite willing to do away with “unjust enrichment” privileges. Finally, as this article explains, “white progressives insist on spreading the gospel of white privilege.” Despite the rise of white identity politics, it is clear that many, if not most, white people support the pursuit of racial justice.

As the fraught national conversation about race indicates, however, a principled commitment to racial equity does not necessarily imply agreement about the specific policies that will (1) most effectively turn a club good for white people into a public good for everyone; (2) ensure that white people internalize the costs of “unjust enrichment”; or (3) provide incentives for everyone to take sufficient precaution in their social interactions to ensure that other people are spared injustice and not ill treated in a context of majority/minority dynamics. Policy differences are a function of “belief differences,” as in Acemoglu’s analysis of the political Coase theorem, rather than a result of social conflict as the theory of white fragility contends.

Perhaps no issue better illustrates this than affirmative action. Club goods can generate network externalities, which arise from the acquisition of what economist Glenn Loury calls social capital, i.e. “familial and communal resources … [which] explicitly influence a person’s acquisition of human capital.” In this view, “[s]ome important part of racial inequality … is seen to arise from the way that geographic and social segregation along racial lines makes an individual’s opportunities to acquire skills depend on skill attainments by others in the same social group.” The role of social capital demonstrates the central importance of ensuring that privileges worth having are public goods for everyone, rather than club goods for white people only.

Professor Loury makes an important distinction between preferential affirmative action and developmental affirmative action (discussed in further detail here). Privileges worth having—such as being accepted into residential communities with plentiful resources and a civic commitment to propitious municipal policies—are public goods that generate positive externalities, chief among which is social capital. The effort to turn club goods for white people into public goods for everyone implies an effort to ensure equal access to social capital for everyone. This should entail promoting affirmative action programs that galvanize the economic development of under-resourced communities, rather than focusing more myopically, and less productively, on quotas. Society has an interest in cultivating the social capital that comes with full immersion in the network of opportunities that “privileges worth having” offer. I strongly suspect this distinction would assuage much opposition to affirmative action among white people.

Search Costs

In addition to sober policy differences, there is also the social friction that results from white fragility theory. The seeming arbitrariness with which white privilege is invoked to explain everything from differences in socioeconomic outcomes to alleged micro-aggressions to the latest news headlines greatly exacerbates the tensions already present in the sensitive national conversation about racial justice.

Context matters. We can rarely be absolutely certain about the role of “white privilege” in specific social and economic outcomes. We should rigorously examine claims that white privilege is manifest in any specific situation. But Whiteness scholars like DiAngelo simply point to the obvious historical legacy of racial inequality and disregard rigorous examination. As labor historian Eric Arsenen has pointed out, “whiteness has become a blank screen onto which those who claim to analyze it can project their own meanings.” This capriciousness encourages speculative rather than rigorous discussion about, as DiAngelo puts it, “whether in any given moment I’m behaving in anti-racist ways” (a point I make in a recent essay). It also makes the conversation never-ending. DiAngelo has written that “racial justice learning is ongoing and our learning is never finished.” White fragility theory increases search costs by encouraging ceaseless, and even arbitrary, speculation rather than due process, aimed at a resolution.

Conclusion

White fragility theory functions as a transaction cost, which sabotages progress in the conversation about racial justice. A Kafka trap and bullying rhetorical tactic, which relies on an erroneous conception of whiteness as reified dominance, white fragility theory itself impedes reform efforts by depicting whites as incorrigibly committed to the ongoing reification of white supremacy—in spite of the increasing number of white progressives who “are leading a ‘woke’ revolution that is transforming American politics.” DiAngelo actually blames white progressives, whom she calls her “specialty” (see around 13:30) and sees as “the most difficult and [who] land the most harshly on people of color day in and day out.”

A recent paper provides evidence that, while “social liberals were overall more sympathetic to poor people than social conservatives, reading about White privilege decreased their sympathy for a poor White (vs. Black) person.” According to the paper, “what we found is that when liberals read about white privilege … it didn’t significantly change how they empathized with a poor black person—but it did significantly bump down their sympathy for a poor white person.” Moreover, the theory of white fragility invariably treats all disagreements about the nature of racism and how it can be addressed as disagreements in bad faith. This is the kind of acrimonious approach that may explain why diversity training can make people more biased, or why social liberals reading about white privilege can end up having less sympathy for a poor white person.

The rise of Donald Trump has certainly not ameliorated racial tensions (as I have discussed here, here, and here), but neither have DiAngelo and her theory of white fragility. Intended as disruptive, white fragility theory undermines its own project of bridging the racial divide and addressing racial inequality, not only by trivializing racial inequality, by, for example, drawing “spindly connections between social etiquette and institutional power,” but by forming part of a proselytization effort that incites racial conflict by bullying objectors into silence.

DiAngelo has explicitly said that it is “less relevant to me whether we agree or disagree” because “I don’t really need everyone to agree with me.” She clarifies: “[Malcolm Gladwell’s] tipping point theory says you just need 30 per cent to change culture.” Her inquisitor-like presumption of omniscience is groundless, given her theory’s numerous shortcomings, which obscure a more refined understanding of white privilege and how it relates to racial inequality. Her pugnacious arrogance thus serves only to raise transaction costs and contribute to a breakdown in collective negotiations on how to address racial inequality.