Trading Places

The movie Trading Places relates how two men trade places and what happens when they do. One is black and the other is white, though the movie is more about class differences than about racial differences. But the story does revolve around financial markets, so let’s explore ways to associate a dollar amount with possible trades.

The idea for this post comes from a colleague of mine who belongs to the small circle of folks who both have a Ph.D. in Computer Science and have been stopped by the police for the non-crime of Driving While Black.

He mentioned he had once read a paper, or perhaps even a book, that tried to assign a monetary value to racial prejudice, using an approach along the following lines. (A similar approach applies to other minorities such as women.)

Let’s assume we have a large amount of money at hand and set up an organization called the “Trading Places Fund” (TPF).

TPF also has special powers that lets it level the field and so is able to approach two individuals, A and B, who are quite similar but differ only in one key factor such as race. TPF picks an amount N and makes the following offer to each:

A: If I give you N dollars, will you trade places with B?
B: If I give you N dollars, will you trade places with A?

By “level field” I mean for example that both A and B would have the same life span independent of whether or not they accept the offer.

It’s easy to imagine cases where one would accept the offer.

For example, if I am A and I live in New York City, while B lives in Philadelphia, and you offer me a million dollars to move to Philadelphia, then I, as would W. C. Fields, reply, I would rather be living in Philadelphia..

Now suppose A is white and B is black. More precisely, suppose you are A. How much would TPF have to pay you to assume the burden of being black?

Suppose I’m the B waiting for you as A to make your decision. I would make the counter-offer to TPF:

You don’t have to pay me to be white. Indeed I’ll give you all my money just to have a chance to start over, but with all the advantages of being white.

That illustrates another way to assign the value to the trade. What fraction of your net-worth would you be willing to give to make the trade? All, nothing, or somewhere in between?

While this example speaks to the future, others have looked into similar approaches to redress the wrongs of the past. See for example, Suit seeks billions in slave reparations.

There is another way to redress past wrongs, affirmative action. I certainly favor that over payment in dollars, as such payments are a one-time thing, while affirmative action seeks to create a new environment in which racial prejudice will find it harder to survive.

One of the problems with affirmative action is that those who are disfavored by its use see it as a breach of their own right to equal treatment. These arguments have the form, “Yes, it would be good to have more black lawyers. But as a white person I have as much a right to get into law school as anyone else, so why should I suffer for past wrongs?”

If I had my way, I would like to see us try a societal-wide form of affirmative action, a true trading of places. It’s impossible, just a dream, but it’s worth thinking about what might happen were we be able to carry out the experiment.

We’ve spent almost four centuries discriminating against blacks in this county. So let’s change the laws for just forty years, one-tenth of that time, in such a way that white s will suffer, by force of law, similar discrimination.

That would take just about two generations. I think it would be more than enough time to bring us much closer to a state of true equality.

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