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August 31, 2012

Does the Diversity Justification for Affirmative Action (Mis)Use Minority Students? Reassessing the Supreme Court’s Decision in Grutter

Cross-posted from Justia's Verdict.

The Supreme Court Term that begins in October, like the one that wound down this past June, features some potentially momentous cases. Perhaps the biggest case on the Court’s 2012–13 docket so far is Fisher v. University of Texas, a case in which the Justices will take up once again the extent to which public higher educational institutions can make use of an individual’s race at the admissions stage. (I have written a number of other columns on Fisher, including one viewable here (Part One) and here (Part Two), that provide additional background.)

One big question the Fisher case raises is whether the U.S. Court of Appeals for the Fifth Circuit properly applied the Supreme Court’s 2003 ruling in Grutter v. Bollinger, in which a narrowly divided Court purported to apply strict judicial scrutiny to, but ultimately upheld, the University of Michigan Law School’s use of race alongside many other factors in its admissions process. But in addition to the question whether Grutter was properly applied in Texas is the question some have raised about whether Grutter should itself be overruled. And one challenge to Grutter that I have seen discussed in some recent academic commentary is whether the “diversity” rationale of Grutter—the idea that admitting minority applicants even in part because of their race helps create a better learning environment for nonminority students—problematically uses, instrumentalizes and commodifies minority applicants. In the space below, I take up this idea and offer some responses.

The Foundation of the Constitutional Concept of Educational Diversity: The Bakke Case

To assess the diversity rationale, a good starting point is the Bakke v. Regents of the University of California case from 1978. There, a splintered Supreme Court struck down an affirmative action admissions program undertaken by the medical school at the University of California, Davis, saying that the Davis plan, under which 16 out of 100 entering medical school slots were reserved for members of traditionally underrepresented racial minorities (e.g., Blacks and Latinas/os), violated federal law (either the Equal Protection Clause of the U.S. Constitution, federal statutes that prohibit discrimination on the basis of race, or both.)

Justice Powell wrote a famous opinion (parts of which were joined by other Justices) that controlled the outcome of the Bakke case. In it, Justice Powell said that medical schools (and, by extension, other institutions of higher education) had a legitimate and compelling interest in assembling a student body that was diverse along many lines, including race, but that the Constitution forbade the particular means—racial quotas—that Davis had used to further that interest.

Instead, said Justice Powell, an individual applicant’s minority race can be used as a factor in admissions only when the university also considers a number of diversity aspects other than race, and only when each applicant is compared—taking into account traditional academic strength, the various dimensions along with s/he might add diversity, and other criteria—individually against all other applicants, rather than being evaluated only as against applicants of the same race for a set of pre-designated slots. Justice Powell lauded the racial “plus” plan (which he said was embodied in the way Harvard had structured its admissions system) even as he criticized the quota approach.

Grutter and Gratz: A Supreme Court Majority Embraces Powell’s Approach

In 2003, 25 years after Bakke, the Supreme Court again took up the question of race-conscious affirmative action in higher education, in a pair of cases involving the University of Michigan. In Grutter v. Bollinger, the Justices, by a 5-4 vote, with Justice O’Connor writing for the majority, adopted the approach of Justice Powell in Bakke in upholding the University of Michigan Law School’s race-based affirmative action plan. Whether or not Justice Powell’s view—that racial diversity was a compelling interest that could be permissibly furthered by a narrowly tailored policy that looked at the entirety of the personal and academic attributes of each candidate (including her race) in a system where no slots were reserved for people of particular races—was a “holding” for the Court in 1978, the Court adopted that approach in 2003 in Grutter and made it indisputably the law of the land.

And because, said the Court, the Michigan law school plan at issue in Grutter did not use quotas, but rather took into account race and other characteristics of each applicant in a person-specific and holistic way, the plan survived the “strict scrutiny” that is required under the Constitution for all governmental consideration of an individual’s race. Chief Justice Rehnquist, joined by Justices Scalia, Kennedy, and Thomas, dissented.

In the companion case, Gratz v. Bollinger, the University of Michigan’s undergraduate admissions program, which used race in a more systematic and mechanical way, was struck down by the Court because it operated too much like the forbidden Bakke quota system.

Fisher, the Direct Challenge to Grutter’s Premise it Presents, and a Possible Response

That brings us to Fisher, where one of the questions the Court might take up is whether to retain or overrule Grutter. One line of criticism of Grutter can be found in the recent writings of a venerable constitutional scholar at Vanderbilt Law School, James Blumstein. In some recent scholarship, Professor Blumstein expressed concern over the fact that under the diversity rationale, race-conscious policies are justified “not for the sake of the black and minority students’ own education but largely for the sake of affording educational benefits to others.” In Grutter itself, he points out, the “students who secured the lion’s share of the educational benefits from student body diversity were white students who matriculated to the [Michigan] Law School.” This leads him to suggest that “[w]hatever one might think of group-based racial preferences targeted remedially . . . one should take pause at the non-remedial commodification rationale underlying Grutter. [Grutter] treat[s] minority-student presence as instrumental, a means toward achieving the end of improved quality of education at a public institution of higher learning.”

What are we to make of this? For starters, I should say (and have written) that I lament the doctrinal demise (caused by what I view as intellectual missteps of the Court itself) of the remedial rationale for race-based affirmative action, in favor of an exclusive focus on educational diversity. And I have noted that, technically speaking, the Court has not required that diversity-based affirmative action programs help the admitted minority students in order to survive strict scrutiny. Moreover, race-based commodification, in the form of slavery, remains the single most egregious insult to liberty and justice in American constitutional history.

And yet I am still not as worried by the “commodification/instrumentalization” problem created by the diversity theory as Professor Blumstein appears to be, for three related reasons.

First, it seems to me that university admissions folks instrumentalize or commodify applicants no matter which admissions criteria they employ. If a public college looks only at high school grades and standardized testing scores—and does not consider race or other elements of the whole person—it is doing so at least in part to produce a student body that will make the school look more elite and prestigious in the rankings game and to the outside world. Surely traditional admissions criteria are not designed simply to reward hardworking applicants—use of grades and scores rewards not just hard work but also innate academic aptitude. Nor are colleges that use only “objective” criteria trying simply to identify those applicants who themselves could make the best use of the college’s educational resources; to be sure, the colleges care about the students, but they also care about the short- and long-term success of the colleges themselves. Indeed, it is somewhat ironic that looking at more, rather than fewer, aspects of a candidate’s overall personhood would generate a greater sense of impermissible commodification.

My second response follows closely from my first: Under the diversity rationale that focuses on a number of different kinds of diversity (not racial diversity alone), virtually all admitted students, not just racial-minority students, are in some sense being commodified. The standardized-test whiz, the musician, the computer geek, the older “returning” student, the actor, the farm kid from the underrepresented rural Midwest, the athlete from the big inner-city school, all are being admitted—and I suppose, in some respect, all are being used—by the university to enhance the institution and the educational experience of other students. When commodification/instrumentalization is so broad and pervasive, it loses much of its normative taint under the Constitution—this is why taxes (which instrumentalize all of us) are viewed differently than takings (which make public use only of some of us.)

Finally, we must bear in mind the voluntary nature of participation in an affirmative action program. Minority applicants needn’t choose to attend a school in which their race likely played a factor in their admission; they are free to instead attend a school where their “objective” academic indicators (e.g., prior grades and standardized test scores) place them more comfortably in the mainstream. Because matriculation is voluntary, I think we can infer that the vast majority of minority students who do choose to attend schools where their minority race played an admission role believe that the access to the (presumably) more elite institution outweighs any stigmatic or psychological cost of being “used” for the benefit of other students. In this respect, at least if we are to credit the market-based choices minority applicants make, educational diversity can be seen as “win-win.” In short, the commodification/instrumentalization present in affirmative action seems to me no worse than, and probably much less troubling than, the use that universities make of Division I athletes in exchange for a scholarship and a first-rate education. Certainly, it is nothing like the commodification represented by slavery.

I do have a caveat here, though: If indeed minority students are making choices to attend institutions based on misinformation, or insufficient information, about whether they would be helped or hurt by attending the more elite institution, then that information glitch needs to be addressed for my confidence about the win-win nature of the diversity-based affirmative action to continue. That is why even though I am dubious about many of their substantive hypotheses, I support the efforts of so-called “mismatch” theorists to obtain the best possible information from educational institutions in order to test their claims that minorities would likely be better off if they chose not to attend institutions that made use of their race to admit them. At a minimum, if these claims have merit (and, again, I am far from convinced that they do), then applicants would need to be so informed, so that they could make choices about their own individual circumstances that guarantee that, even if they are being used, they are not being misused.

August 12, 2012

Debunking the Myth of Homeownership

This Op-Ed appeared in the Sunday edition of The Sacramento Bee.

Homeownership promises more than it delivers. Americans purchase homes for perceived financial security and social benefits, while politicians push homeownership for imagined economic growth. Such claims are traded like stock tips around water coolers and repeated by "experts" paid by the real estate and home building industries. But they are merely myths, widely held but false.

Here are some of the biggest whoppers.

Homeownership is a good investment.

According to housing guru Robert Shiller, from 1950 to 2000, annualized returns to housing averaged less than 0.5 percent after adjusting for inflation.

Returns were even lower over a longer horizon, with real prices growing 0.4 percent per year from 1890 to 2004. Relative to other investments, owner-occupied housing has grossly underperformed.

Between 1926 and 2009, compounded annual returns for small stocks (11.9 percent), large stocks (9.8), long-term government bonds (5.4), and Treasury bills (3.7) far outpaced housing returns.

Owning a home is the path to prosperity.

At best, homeownership amounts to a decent savings account, but even then it is ineffective. Policies like the mortgage interest deduction encourage taxpayers to finance homes with debt, and result in leveraged ownership, not true ownership.

Between 1950 and 2010, the percentage of home equity plunged from 80 percent to 38.5 percent. In the words of one commentator, "the cold, unsentimental fact about the American dream is that Americans never really owned it in the first place."

Homeownership creates positive social benefits.

The housing industry likes to say that homeowners enjoy better lives than renters. It touts studies correlating homeownership with higher rates of civic participation, beneficial effects on children's well-being and behavior, and lower rates of crime.

But no study has identified a causal connection between homeownership and what economists call "social capital." Children of homeowners might exhibit lower rates of truancy than children of renters, but that doesn't mean renting will land your kid in juvenile hall or that owning will get her into Harvard.

In fact, studies that isolate causal influences of homeownership on social capital find that the purported benefits disappear and even become negative.

Housing subsidies lower the cost of homeownership.

Current housing policies distort the allocation of financial capital by altering the decision to pay for homeownership with debt over cash or other assets.

Thanks particularly to the mortgage interest deduction, mortgage indebtedness soared in the decade preceding the housing collapse, rising as a percentage of GDP from 47 percent in 1995 to 81 percent by 2007.

Subsidized mortgage debt encourages homebuyers to consume bigger, costlier homes. Yet artificially boosting the cost of housing helps no one. Higher prices prevent millions of potential homebuyers from entering the market.

And while current homeowners may prefer inflated prices for maximizing gain upon sale, any perceived benefit is illusory as sellers become buyers in the same overheated market.

Housing subsidies help the economy.

Housing subsidies distort the decision over where to invest as much as how to invest. By lowering the cost of owner-occupied housing, subsidies contribute to overinvestment in residential real estate.

"Don't build a factory, build a mansion," economist Kevin Hassett has said of the mortgage interest deduction's influence on capital investment. Indeed, while the tax rate on corporate investment exceeds 30 percent, housing enjoys a rate near zero.

The distortions caused by tax subsidies for housing may account for half of all misallocated capital in the economy, shrinking GDP by 10 percent.

They also contribute to labor immobility, which raises unemployment. No wonder nearly every economist believes "the most sure-fire way to improve the competitiveness of the American economy is to repeal the mortgage interest deduction."

Housing subsidies help middle-class families.

Subsidies for homeownership accrue disproportionately to upper-income households.

Only 3 percent of taxpayers report income over $200,000, but they enjoy 35 percent of the mortgage interest deduction's largesse, while the 75 percent of all taxpayers earning less than $75,000 receive just 11 percent.

In fact, the mortgage interest deduction delivers 10 times the savings for households with income over $250,000 compared to those with income between $40,000 and $75,000.

The disparity in benefits exists because taxpayers receive them only if they itemize deductions.

But just one-third of taxpayers itemize, while two-thirds take the standard deduction (and thus receive no benefits). Even among itemizers, high-income households receive larger benefits, because the value of the subsidy rises as taxable income increases.

There are good reasons to buy a house. But none of them involves attaining financial security, admission to elite colleges, a stronger economy, lower taxes, or the American dream.

August 7, 2012

OUT and ABOUT: The LGBT Experience in the Legal Profession

ABA SOGI Commission

For the past three years, I have had the pleasure and the honor of serving as the Chair of the ABA Commission on Sexual Orientation and Gender Identity (SOGI Commission). The SOGI Commission was created in August 2007 by approval of the Board of Governors of the ABA. Its mission is to promote full and equal participation in the legal profession and the justice system without regard to sexual orientation or gender identity. The SOGI Commission seeks to further this mission through education efforts, policy development, outreach and relationship building, and other activities.

The SOGI Commission has accomplished much in its short history. For example, the SOGI Commission worked with other ABA entities and leaders to enact ABA policy supporting marriage equality for same-sex couples. This policy recommendation was overwhelmingly approved by the ABA House of Delegates in August 2010 with the support of many ABA leaders, including many Past Presidents of the ABA.

With the assistance of the SOGI Commission, the ABA submitted letters to Congress and to the Department of Defense in April 2010 urging the repeal of Don't Ask, Don't Tell. Congress approved the repeal of Don't Ask, Don't Tell about six months later. More recently, the Commission helped draft a letter to Congress urging the enactment of the Employment Nondiscrimination Act (ENDA).

More information about the SOGI Commission and its work is available in our Annual Report.

Out and About Publication

Currently, the SOGI Commission is working together with the National LGBT Bar Association to produce an anthology. The purpose of this anthology is to share the experiences of lesbian, gay, bisexual, and transgender (LGBT) attorneys, academics, and jurists in the legal profession, through their own words. We see this publication as a means to educate the legal profession and the general public about this diverse group, its contributions, and its struggles. The book will also serve as an inspiration to other LGBT people in the profession and to LGBT law students.

Currently, the SOGI Commission is in the process of identifying potential contributors for the publication. The Commission seeks to make the publication as diverse as possible in order to represent the breadth of LGBT persons in all aspects of the profession. Moreover, our hope is for the stories to be relevant for a multitude of readers, whether or not they identify as LGBT.

For more information about how to contribute, please visit the SOGI Commission's website.