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The Attack on Abercrombie & Fitch
October 7, 2003
by Erich Mattei

Producers constantly strive to create that new style they hope will spark a demand all its own, a fashion worthy of the consumers' vote, thus being victorious in the next market election. Abercrombie and Fitch has been that triumphant candidate in recent years, setting fads that have stormed the market.

The latest news surrounding the clothing chain, however, is not in regards to its new summer line or its plans for next fall, but rather a discrimination lawsuit brought against the industry leader.

A lawsuit filed in federal courts in recent weeks reportedly states that "Abercrombie discriminates against blacks, Hispanics and Asians by enforcing a nationwide corporate policy of preferring white employees for sales positions, desirable jobs and favorable work schedules."

The allegations, initiated by nine Hispanic and Asian plaintiffs who were employed by the retailer, claim that the company requires its sales people to exhibit an all-white "A&F look," posts store advertisements that feature mostly white models, and typically hires minorities to work stock room and overnight jobs.

Attorneys representing the plaintiffs also contend that the company overwhelmingly advocates an "all-white look" which they argue is discriminatory and is grounds for legal proceedings.

"If you look at the material they put out, they are cultivating an all-white look," said Thomas Saenz, vice president of litigation at the Mexican American Legal Defense and Educational Fund, and one of the attorneys representing the plaintiffs. "It is difficult to understand why, given that their target age demographic is even more heavily minority than the rest of the population, they would choose to do this."

In other words, Abercrombie and Fitch, a constant winner in the voluntary "dollar-vote" elections of the market, is accused of being an intensely racist company in both its employment practices and its product marketing.

Regardless of the intentions and supposedly prejudiced nature of Abercrombie and Fitch's corporate policies, and the steps it may or may not take in making employment and marketing decisions, the lawsuit brought against the company is an embodiment of either misunderstanding or old-fashioned ignorance.

Clearly, this case is characterized by the same absurdity that all discrimination lawsuits and legislation share, a failure to recognize the nature of individual preference and the harmonizing activities in the free market.

Although many individuals will not hesitate to deny it, everyone discriminates on a daily basis. The fact of the matter is that discrimination is nothing more than the active demonstration of preference. Human interaction has been composed of discriminatory actions since the dawn of the race. Individuals make decisions and act on those decisions based on what they perceive to be most beneficial to them at a specific point in time.

One may choose coffee over tea, or enroll in an economics class over a sociology class based on their preference, clearly discriminating against the other. Likewise, an individual may wish to apply for employment with a particular company while a decision-maker of a company may wish to hire a particular individual corresponding to their perceived benefits. Discrimination is the fundamental exhibition of liberty, an individual's ability to make decisions and act out in accordance with those decisions.

In the free market, companies that discriminate irrationally struggle to survive and sometimes perish. When one discriminates, one inherently limits the alternatives made available by ruling certain alternatives out of the decision-making process, regardless of the potential that may lie in that alternative. Applied to employment, the company that chooses to hire employees based on unmerited discrimination instead of utility or productivity will surely fail to maximize profits.

For example, suppose two individuals with differing levels of quantifiable productivity apply for the same position at the same point in time. All things being equal, from the economic perspective, hiring the more productive individual would be advantageous to the company. Should the company, however, choose to employ the less productive individual, it will not realize profits as high as those brought about by employing the more productive individual.

Discriminating against customers, in any way, further hampers profitability. For the company, loss of profit is inevitable as it has reduced its pool of potential customers, be it through marketing products to some persons and not others, or prohibiting individuals of a particular demographic from patronizing the business. When a business discriminates against customers eager to satisfy their demands with the product that the business sells, the business is essentially refusing revenues.

In essence, the irrationally discriminating seller is creating an opportunity cost where it need not exist. Given this economic truth, one can see how Wal-Mart and other notably prosperous companies have achieved their success--they cater to virtually every customer in the market for virtually every product. Lucrative businesses are such not simply as a result of satisfying consumer needs, but also because they recognize that satisfaction of the greatest amount of consumers is necessary to maximize profitability, and therefore realize that discrimination would be detrimental.

Another issue not to be overlooked in an analysis of discrimination is the reputation a discriminator may create for itself. A reputation, the opinions individuals have about another person or entity, is formed out of the personality or behavior perceived to be characteristic of that person or entity. The discriminator may find itself discriminated against accordingly if other individuals are critical of discriminatory conduct and do not wish to be associated with such an entity. In the market for goods and services buyers typically discriminate against sellers based on the products they offer, the bundle of benefits a buyer perceives in purchasing from a particular seller. Included in this bundle of benefits is the overall character of the seller, which may be of interest to a buyer.

Given the position that an irrational discriminator puts itself in through both its own biased ways and the resultant reputation that may cause discrimination towards it, one can conclude that any entity which practices excessive, unmerited discrimination would certainly struggle to survive in the free market.

A ruling in favor of the plaintiffs in the Abercrombie and Fitch discrimination case would no doubt bring many more lawsuits of the like before the courts. The fact of the matter is that there would be no difference between this particular case and a case brought by a Caucasian against FUBU for its "all-black" look, or a male against Victoria's Secret for catering to women, or an elder against The Gap for not favoring the elderly. Basically, discrimination is in no way, shape, or form criminal, rather, it is nothing more than the exhibition of preference, which is legal in a society that calls itself free.

This article originally appeared at Mises.org.

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