Classifying America: Government’s Power to Define Is the Power to Discriminate

In one of the most famous phrases uttered by a Supreme Court justice, Potter Stewart defended his ruling in an obscenity case (1964) by refusing to offer a clear definition. Instead, he stated:

“I shall not today attempt further to define the kinds of material I understand to be [hard-core pornography]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that.” (emphasis added)

Judges can make such decisions on a case by case basis. Legal concepts don’t lend themselves to strict classifications that can be ruled upon robotically by men and women in black robes.

The administrative apparatus of the U.S. government (federal, state and local) is another matter. Collectively, the bureaucracies of this sprawling Leviathan extract and expend over $6 trillion annually. (For a folksy way of explaining that sum to friends and family, see my essay “The Power of Numbers: Simplify! Simplify!”)

Government spending does not capture the reach and power of U.S. bureaucracies. With so much legislative power delegated to administrative agencies, these agencies have become bureaucratic oligarchs. Regulations, unfunded mandates, distributions and preferences for some groups require detailed, complex, and often arbitrary definitions concocted by “public servants” cloaked in anonymity. These mid-level bureaucrats possess the immense power to define and classify. To define a group as eligible for benefits or preferences is to exclude those outside the group of the same treatment. Equal protection of the law goes out the window as individuals or business in government-defined preferential groups benefit from “affirmative discrimination” while those not-so-defined suffer.

Yet, here is the dirty secret of the State: the definitions upon which so many programs and policies are based are at their root LIES. For example: Congress called upon agencies to use objective criteria to determine the definition of a “small business” or a “disadvantaged group”; yet, mid-level bureaucrats simply made the classifications based on prejudice, convenience or a seat-of-the-pants judgment! We live with the consequences of categories that objectively have little or no meaning. To paraphrase a popular TV show title, the administrative state is a “House of Lies.” Challenging the basis of definition is an effective way of demonstrating that “the Emperor (State) has no clothes” when it purports to aid groups that it made out of thin air.

The problem of defining groups is the “problem with no name” in policy circles. I first encountered this fundamental problem when writing a history of the Small Business Administration (Big Government and Affirmative Action: The Scandalous History of the Small Business Administration, 2001). The agency had tens of billions of dollars to disburse or award annually but first it had to define “small.” [This problem is worldwide—one rather long book discussed the many definitions of “small” enterprise under governments around the world—even in the communist sector! (Hertz, In Search of a Small Business Definition: An Exploration of the Small-business definitions of the U.S., the U.K., Israel and the People’s Republic of China, 1982)] Excerpts from my book highlight the dilemma:

“The small business community fell into the category of a large group with conflicting internal interests. What did a ‘Mom-and-Pop’ grocery have in common with a ‘small’ manufacturer employing hundreds of people in a high-tech industry? At what point did a ‘small’ business become a ‘big’ business?” “The public definition of small business encompassed ‘Mom-and-Pop’ firms with fewer than ten employees, yet SBA size standards included companies with hundreds or even thousands of employees because they were ‘small’ within their industry.”

A company once defined as “small” could retain those benefits even if it grew well beyond the size standard. Who was going to check? Being defined as “small” meant the SBA discriminated against those businesses that were not “small.” So, what is a “big” business to do? Purchase or control a “small” firm defined as such by the government. The subsidiary will front for lucrative contracts “set aside” for small business. (Yes, America’s largest corporations engage in this fraud). This isn’t illegal because the SBA doesn’t routinely remove firms from the “small” category

Aye, there is the rub. In a stinging critique of the SBA’s scandalous behavior, The New Republic put forth “TRB’s law of scandals, which holds that the real outrage isn’t what’s illegal: it’s what’s legal.”

The SBA was also an early pioneer in defining racial groups that did not exist under statutory law until agency bureaucrats subverted the Civil Rights Act, which demanded no discrimination based on group status. SBA bureaucrats, together with their counterparts at other agencies, set about transforming a nondiscrimination law into a vehicle of government-sponsored discrimination. There is no better demonstration that we are ruled by bureaucrats than this outright contempt for the plain meaning of the Civil Rights Act passed by Congress and signed by the president.

The use of group definitions is most disturbing when it touches upon race, color, creed or national origin. In Race and Liberty in America: The Essential Reader, 2009), I anthologized the classical liberal struggle for liberty and equality regardless of group status. When Frederick Douglass married a white woman, the Washington Post questioned whether his doing so disrespected “the colored people, who look to you as a leader.” Douglass retorted that his skin color was irrelevant: “I am not an African, as may be seen from my features and hair, and it is equally easy to discern that I am not a Caucasian.” “I conceive that there is no division of races. God Almighty made but one race. . . . You may say that Frederick Douglass considers himself a member of the one race that exists.”

Douglass’s colorblind self-definition epitomized that element of the classical liberal tradition of civil rights—one that even the NAACP held to as late as the 1960s when it rejected all government racial classifications as a step backward toward discrimination.

Yet here we are today with racial classifications that conceal the divisions within the so-called “races.” The SBA ran into this problem in the 1970s. In a rare moment of clarity, someone at the SBA wrote that:

“This principle [of racial classification] could have sweeping implication through the social order. There might also be administrative problems in applying a purely racial or ethnic standard. Would a person who is one-quarter Indian be eligible? One-sixteenth? How is racial background proven? Who is a Spanish-speaking American?”

Who remembers that today’s category of “Hispanic” was preceded by “Spanish-speaking American” and “Spanish-surnamed American”? Do any of these groups have any meaning other than to discriminate for some and against others?

In a recent op-ed, “The Triumph and Trashing of the Civil Rights Act,” I summarized how the revival of racial classifications made possible the division of America into racial blocs.

“This mischief was made possible by the creation of arbitrarily-defined racial categories. The Civil Rights Act did not list any groups by name. Regardless of group status, there was to be no discrimination. Categories such as ‘Negro’ (later Black, African American), Mexican (later Spanish-speaking, Spanish-surnamed and lastly, Hispanic) came after the fact. This process of ‘check boxing’ America began in 1965, when bureaucrats . . . placed racial categories on government forms. Armed with check boxes, bureaucrats, judges and politicians treated individuals differently based on their group status—plainly prohibited by the Civil Rights Act.”

Sadly, the Supreme Court dithers on the issue of whether racial “diversity” practices are constitutional or not. Noting the illogic of racial classification, Justices Scalia and Thomas point out the legal nonsense of courts accepting dubious racial classifications: “Does a half-Latino, half-American Indian have Latino interests, American-Indian interests, both, half of both?” (See my op-ed “Are Some Groups More Equal Than Others?”)

Here is the lie of government classification: definitions that are so vague, broad and absurd (“Spanish-Surnamed?”) beg for mockery. Advocates of liberty need to strike at the root by pointing out the absurdity of classifications underlying so many policies. Arguing about whether the policies are good or bad, help a “group” or not are pointless: if the group doesn’t exist or isn’t worth recognizing, then any further debate is moot!

This rather lengthy post offered two examples of the fallacy and folly of government classification. If “small” business doesn’t exist, then abolish the SBA. If the government can’t define race in a way that captures, in any meaningful sense, the multitude of individuals making up the “group,” then abolish all race-based programs. Restore the Civil Rights Act to that “plain meaning” of no discrimination. Period.

Lastly, this “striking at the root” approach is worth taking in other areas. Time and again, I’ve attended conferences where scholars deliver papers on tax policy. These authors lament that our income tax code isn’t “more progressive.” But what does that mean if the tax code’s definition of money (to be taxed on a nominal basis) is meaningless because it fails to account for huge differences in the real value of the money being taxed? To the IRS, $100,000 income in Carbondale, Illinois is the same as a $100,000 income in San Francisco. In reality, the person in San Francisco has a cost-of-living adjusted income worth $36,700 in Carbondale, IL. Such is the illusion of money earned without reference to its real worth. Ask the “experts” whether the tax code’s inherent inequity ought to be rectified to reflect real income (in purchasing power) and you will get a “deer in the headlight” look.

“Everyone” takes for granted what should not be “taken for granted.” “Everyone” knows or accepts the definitions and meanings put forth by a government dressing itself in a cloth of lies and confusion.

Perhaps it is time to be like the small child who pointed out that the Emperor has no clothes. That child saw what was plain as day. We “experts” pontificate about the merits or shortcomings of the “clothes” (policies) when, in fact, there are no clothes.

[Originally posted at http://notesonliberty.com]