The Free Market [The Mises Institute monthly]
January 1997, Volume 15, Number 1

The Mugging of Texaco
by Justin Raimondo

The furor over the supposed racism of Texaco's management dramatizes, in miniature, the tragedy and danger of so-called civil-rights legislation. The Texaco story paints a vivid picture of what we've become: an economy distorted and abused by a racial spoils system, in which race is pitted against race, employees pitted against employers, and all power is held by federal bureaucrats and magistrates who "resolve" disputes by taking capitalists to the cleaners.

It is a rotten system designed to incite and live off of ethnic hatred and class struggle. The winners are trial lawyers and their government allies, and the official victim groups that make off with what remains of the loot. The real victims are ordinary stockholders, who are denied a voice in where their money goes, and American workers and mid-level managers, who are cheated out of jobs, subjected to invasive and demeaning "diversity training," and terrorized by the "civil rights" thought police.

The Texaco saga began two years ago when Mary Devorce, a black accountant in Texaco's Denver office, filed a complaint of racial discrimination. As managers do these days, her boss fell all over himself to reassure her that her job was safe. Not only that, but her supervisor proposed changing her work situation to remove her from what she regarded as a hostile work environment. The goal in this shuffle is always twofold: prevent the story from coming to the attention of the media, which are never interested in the facts, and keep the complaints out of the courts. Sometimes that works, unless the plaintiff's lawyers are dealing with larger corporations with big pockets.

Soon five more people were added to the suit, and it was expanded to a class-action attack on behalf of 1,500 black employees of Texaco. The Justice Department then got interested. What needs to change, said the government, is the corporate culture itself; it must be ruthlessly purged of all resistance to one-way, race-conscious politics. In this unstoppable racket, only whites and only management, never blacks, can act in a racist manner and are therefore vulnerable. And once the spotlight is on your company, there is practically nothing you can do to clear yourself and avoid the inevitable terror campaign. Your company's name will be dragged through the mud, your stockholders will be looted, and there's nothing you can do to stop it.

The real problem, the plaintiff's lawyers said, is that Mary's supervisor called his supervisor, who then reportedly said he would have fired the so and so. Thus began the strange focus on the language of senior and middle management. This focus took a bizarre turn when one disloyal employee Robert Lundwall, the former personnel manager later put on the payroll of the plaintiffs attorneys carried a hidden tape recorder into a strategy meeting of Texaco executives.

According to the transcript the plaintiffs lawyers gave to the media, the taped meetings captured managerial racism, and thus proved company-wide bias. The dreaded n-word was supposedly employed throughout, while the cabal of executives allegedly plotted the destruction of requested documents. In particular, the managers were fretting about the black employees demand for a celebration of the black holiday, Kwaanza. Senior manager Robert Ulrich used the n-word, and called them "black jelly beans."

An orchestrated hysteria began. Though the transcript had not been independently verified, Texaco claimed to be "shocked and dismayed." The guilty parties were fired, and the retirees had their company benefits revoked. "The statements on the tapes arouse a deep sense of shock and anger among all the members of the Texaco family and decent people everywhere," said CEO Peter Bijur.

Groveling even more, Bijur announced that Texaco would make amends with a six-point program to instill proper respect for political correctness. A special subcommittee of the board would oversee the company's racial preference programs; a manager would be in charge of race relations; executives would travel to all Texaco regional centers to communicate the company's "personal embarrassment," while all employees not just managers would be subjected to further "diversity" brainwashing sessions.

But no amount of groveling, no matter how abject, was enough to appease the looters: they smelled blood, and quickly moved in for the kill. "While this is a first step," said Cyrus Mehri, a plaintiff lawyer, "it's too little, too late." Bijur hinted at a generous settlement, but the civil-rights vultures circling overhead were not interested: why settle for a few pieces of flesh when you can devour the whole thing?

As Texaco's instinct for self-preservation finally kicked into gear, the company hired outside investigators who analyzed the tape and produced their own transcript. It turns out that the "n-word" was never used; in speaking about the various religious holidays during the holiday season, Ulrich, said: "Poor St. Nicholas." "Nicholas" was rendered by the plaintiffs lawyers as "niggers," which the New York Times excused as an "aural illusion."

It also turns out that Ulrich never called blacks "jelly beans." The plaintiffs original version of the transcript has him saying, "this diversity thing. You know how black jelly beans agree." What he really said was: "You can t just have black jelly beans and other jelly beans. It doesn't work." This was a reference to a "diversity" brainwashing lecture that analogized diversity to jelly beans in a jar. The independent listening of tapes revealed that the meeting was no hate-fest. The managers were alternatively jocular and confused about what was going on around them. Why was one group of employees setting itself against the interests of the company and those of the other employees in pursuing a hostile and baseless class-action suit?

Wanting to avoid confrontation, Bijur said he was unmoved by the new transcript: this does "nothing to change the categorically unacceptable context and tone of those conversations." Yet even this could not keep the looters at bay. Jesse Jackson, who often speaks as a proxy for the Justice Department, immediately declared a boycott of Texaco products.

The press frenzy went into overdrive. What the civil-rights racketeers were after this time was a Texaco policy of "equal opportunity with teeth." The problem: Texaco gives regular performance evaluations that take no account of race, a practice antithetical to the caste system now being imposed on American business.

An audit by the Labor Department accused Texaco of violating federal civil-rights regulations because minority group employees in one division "had to wait far longer for promotions and were far less likely to receive evaluations that would help them in their careers." Texaco was ordered to "compensate" the minority workers for the "lost" wages.

These bureaucrats whose economic advancement is tied to seniority can't conceive of the idea of rewards from productivity. In the private sector, wage increases and promotions are the result of an increase in perceived abilities. It's true that bad decisions about promotions are made all the time. But they are never made with the deliberate intent to lower profits and productivity; quite the opposite. If employees want to advance, they must demonstrate that they are more capable than their peers.

This absurdity is the logical conclusion of civil-rights laws that give government oversight over hiring and promotions. Short of mind reading, there is no way for the courts to know precisely what motivates managers in their promotion decisions. To be made legally operational, the government measures discrimination in terms of results, i.e. race quotas. If outcomes less than favorable to minorities can be spiced with reports of impolite language, you've got a class-action lawsuit guaranteed to net millions.

Let's say that blacks as a group are advancing on the corporate ladder more slowly than whites. There are any number of possible explanations for this fact, other than a gigantic conspiracy to keep blacks in their place. But so long as government can centrally plan the racial composition of a company's workforce all the way down to scheduling the racial makeup of promotions we aren't allowed to consider any of them.

The crucial point here is that this Texaco mess did not result from "quotas" or "affirmative action" as such. The only law necessary to bring about this legal race riot was the 1964 Civil Rights Act which enforces non-discrimination. So long as the government is in charge of determining what is and is not discriminatory, these kinds of lawsuits will become more and more common.

That is why the conservative critique of race quotas they are bad but anti-discrimination law is great is useless. There's nothing inherently wrong with private quotas, for example. If a private company wants to promote only blacks, whites, men, or women to its top ranks, that is no one's business but the company s. The competitive marketplace will render a judgment on any such policy.

Why should anyone care whether Black Enterprise magazine has an all-black management, or whether they institute a quota system giving whites special privileges? The competitive marketplace provides a myriad of job opportunities. Just because whites can't work there and why would anyone want to work where he is not wanted? does not mean they can't work anywhere, or that their overall economic prospects are sunk.

Let's say that Texaco did indeed irrationally discriminate against blacks in wages and promotion. That would imply that the skills of blacks are being under-appreciated. In that case, there will be plenty of others anxious to pay a marginally higher wage to get a much better employee. The employee should quit and go to work elsewhere. The very prospect of losing good employees is what causes businesses to give promotions and wages matched to skill levels.

When Texaco agreed to settle what they hoped would be the final payment (fat chance), it agreed to: pay $115 million to 1,500 current and former black employees, provide $26.1 million in pay raises to blacks over five years, give all black employees an immediate 10 percent raise, and spend $35 million to set up racial monitoring and more sensitivity training for employees. It was the largest settlement of its kind.

Jesse Jackson still says it's not enough, and the government agrees. As the Texaco tragedy shows, and the left has long known, civil rights will always trump property rights so long as the courts are choosing between the two. There is only one solution to this mess: end government intervention in the labor market, and restore the freedom of association.

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Justin Raimondo is editor of Antiwar.com.