Search This Blog


B.R. quasi-quota plan empowers few, wastes resources

Baton Rouge Metropolitan government seems intent on making the same mistakes as has Shreveport and Alexandria with the imposition of its “Fair Share” program. We must recognize that its primary goal is to serve the needs of politicians and their cronies, not the people.

The concept rests upon the unsustainable notion that businesses not owned by white males without disability somehow are “disadvantaged” when it comes to doing business with a government. Therefore, numerical “goals” are put into place when contracting out that stipulate government should grant a certain proportion of business to firms that are majority owned by non-whites, females, the disabled, and the like. In this case, 25 percent of city-parish projects would have to go to these kinds of firms.

Proponents claim because it’s not a quota system, it has no deleterious effects. However, this not only is a mistaken notion, but this also tries to simulate a quota system without actually having to prove discrimination. (Legally, a “disparity study” must be performed that demonstrates unambiguous discrimination going on – and not even that unambiguous if its implementers get away with using only outcomes rather than investigation of procedures and intents – in order to impose a quota system, which are seldom done precisely as they so often show no discrimination.) Political pressure by backers of the concept make it clear that numbers must come in around that figure or else heads will roll meaning the “goal” is far less optional than would be implied.

The experience of Shreveport should point out the deleterious effects that make this a bad idea. Several problems to the detriment of the city have arisen as a result of its similar program over the near-decade it has been in place:

  • Increases costs needlessly to the citizenry. Especially on larger projects where there are disproportionately fewer such qualifying businesses, those entities know they can bid higher with this artificial constraint against competition and pass this on to consumers. General contractors know they must factor this into their bids as well relative to subcontractors. Local governments also must create bureaucracies to administer all of this, wasting taxpayers’ dollars.
  • Causes administrative problems for contractors. Those general contractors have to spend more resources searching out these kinds of subcontractors to hit the mythical number, again increasing costs to the citizenry. They also know that politicians will grill them and threaten them with reductions in business if they do not hit these goals, so considerable attention must be paid to this to the detriment of actually providing the good or service they are in business for.
  • Often provides little advantage to local firms. Because often these designated firms comprise a disproportionately small part of the local market, contractors outside the area, even across the country, have to be hired to hit the target. This means local taxpayers’ money that could stimulate local business and probably at reduced cost to the citizenry ends up leaving the area.
  • Becomes an exercise in gamesmanship. Many firms to win certification as “disadvantaged” will employ chicanery, such as certain people put up as a front claiming ownership since the actual backers would not qualify. Or, general contractors will take as many liberties as possible in claiming presence of qualifying subcontractors. In both cases, the program’s intent is not being fulfilled.

In the end, only a small number of people benefit from these contrived interferences into the market. A select few contractors – often politically affiliated with certain politicians who back the program – may get increased business. Other politicians claim they are doing something and thus are “sensitive” to the needs of the “disadvantaged” as a result. Almost everybody else pays more, in higher taxes, reduced services, or both.

The city-parish is working on implementation standards but they will not salvage the essential inferiority of this idea. Even if he wanted to veto it but instead has voiced support for it, any veto by Mayor-President Kip Holden appears it would be overridden. Therefore, the Metropolitan Council and Holden needs to rethink this bad idea and get rid of it before it can do damage to Baton Rouge as it has to Shreveport and Alexandria.


R G Sanders said...

BS affirmative action by any other name is still BS affirmative action....between the Metro Council and the EBR schoolboard, I'm surprised there are any taxpayers who still live in that hole.

Obviously, money doesn't equate to smart, either--for the Country Club of Louisiana and Bocage crowd--or they would have moved or fixed this problem long ago.

Anonymous said...

An excellent analysis Professor Sadow. If Baton Rouge goes through with this, nonminority (white)owned businesses could possibility have grounds for a class action lawsuit(i.e., reverse discrimination). From my experience, the minority contractors who typically get preferences from these types of "goals and set-asides" derive most, if not all, of their income from government contracts. Consequently, they are basically "appendages" of government - they are started and exist as "businesses" primarily to take advantage of these preferences because they would not be able to survive in the real marketplace of competition.

Anonymous said...

Associate Professor