Suppose that two similar small businesses in the same state seek funds from that state to relieve the economic effects of the coronavirus pandemic. Suppose that one of the businesses is owned by a Black and the other by a non-Black. Which business should get state funds?
To any fair-minded individual, the answers are either (1) both should get relief, (2) neither should get relief, or (3) if relief goes to only one of the two businesses, the decision should be based on factors other than the owner’s skin color. I believe these are the only answers permitted by the Constitution.
However, the state of Oregon is making these decisions on the basis of race. It has earmarked $62 million of its federal coronavirus relief money to provide grants to Black residents, business owners, and community organizations.
Two lawsuits challenge Oregon’s decision to dole out money to businesses based on race. In one suit, Edward Blum’s organization, Project on Fair Representation, represents a small logging company and an electrical services company, both of which are owned Whites. In the other, the Center for Individual Rights (on whose board I serve) represents a Mexican-American owner of a coffee house.
The New York Times, in an article by its “national correspondent covering race,” reports on Oregon’s race-based program and the litigation surrounding it here. The Times’ race reporter struggles to find a justification for favoring Black owned businesses harmed by the pandemic over similarly situated businesses owned by non-Blacks.
Some of his rationales are laughable. For example, the Times’ race man states that the coronavirus is “disproportionately killing Black people.” If so, giving money to businesses owned by Blacks, but not by non-Blacks, isn’t going to change this.
The Times says that many Black business owners don’t have valuable houses they can tap for capital to keep their businesses afloat during the pandemic. But Oregon isn’t awarding money to Black-owned businesses based on their financial circumstances as compared to other businesses. It’s awarding money based on race.
According to the Times, “Oregon’s long history of anti-Black racism has fueled much of the advocacy for the state’s fund.” The race reporter notes that “as a territory in 1844, [Oregon] passed a law banning African-Americans from settling there.” And as “the state’s Black population ballooned in the 1940s . . .the new Black settlers in Oregon were restricted to certain areas.”
I doubt that Mexican-Americans were treated appreciably better in Oregon than Blacks were. Thus, this justification probably doesn’t apply to the coffee shop owner who is suing the state.
In any case, the Supreme Court has never accepted claims of historical/societal discrimination against Blacks as a justification for present discrimination against Whites. In the Bakke case, Justice Powell called this rationale for preferences “an amorphous concept of injury that may be ageless in its reach into the past.” Ageless, indeed, if we’re going back to 1844.
The fact is that, whatever happened in 1844 or in the 1940s, today beleaguered Black Oregon small business owners find themselves in basically the same position as their beleaguered Mexican-American and White counterparts. They are doing well enough to own a business, but in many cases, not well enough to sustain their business in a pandemic. Past discrimination against other Blacks cannot justify treating Black business owners more favorably than non-Blacks.
However, the Times says that, even recently, Black Oregonians have had a tougher time getting small business loans than their non-Black counterparts:
Without traditional banking relationships, Black business owners often have had to reach into their own pockets or seek other avenues to finance start-up costs, civic leaders said. That left many unable to get pandemic relief loans offered by the federal government because the loans required going through lending institutions.
There may be a case for preferential treatment for small business owners who, for reasons beyond their control, have been unable to obtain pandemic relief loans. If so, all small businesses in that category should be eligible for the preference. Race should not be a factor.
But as I understand it, Oregon’s preferential treatment encompasses Black businesses regardless of whether they have lacked access to loans. (The three criteria for receiving funds are living or being based in Oregon; “self-identifying” as Black, and demonstrating hardship due to the pandemic — see paragraph 17 of this Complaint). And it certainly excludes non-Black businesses that did not have such access.
It’s as if Oregon granted preferential admission to college for Black residents on the theory that Black families lack the resources to pay for services that help enhance the qualifications of their children — e.g., fancy SAT prep courses — but in practice preferred Black applicants who have these resources, while excluding non-Blacks who lack them.
A system of race-based preferences so justified could not stand. Neither should Oregon’s preferences for businesses that happen to be owned by Blacks.