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Okay, so now what do American companies do?

From American public media, this is Marketplace.

In Los Angeles, I'm Kai, Rizdal. It is Thursday today, the 29th day of June.

Good as always to have you along. Everybody, the legal analysis of this morning Supreme Court ruling striking down race-based affirmative action in higher education is better handled elsewhere.

The political analysis also better handled elsewhere. The business and economic analysis, well, better handled here.

Something like 70 major corporations, American Express, Apple and Proctor and Gamble among them, sign on doing a meekest brief in these cases, urging the court to uphold affirmative action, quoting the brief here,

promoting student body diversity on university campuses remains compelling from a business perspective.

So we got economist Peter Blair Henry on the phone to talk it over. He's a senior fellow at the Hoover Institution and Stanford also dean emeritus at the NYU Stern School of Business.

Peter, thanks for joining us. Good to be with you, Kai.

When you heard about this ruling, which many people expected, what was your gut reaction, first of all?

Well, wasn't surprised. This is long-spected. And my first reaction is as an economist. I'm a trained economist. I think about things from that perspective.

But also having a dean of a business school for a good part of my life and working with many corporations, I think about it from the perspective of business.

So if you think about what we teach in our textbooks and what Milton Friedman said in 1970, corporations, what do they do?

Cooperation basically exists to maximize profits. They do other things, but primarily the role of the corporation is to maximize profits for its owners and its shareholders.

And how do they, how do corporations do that? Well, they do that by hiring a CEO and the CEO then make sure that he or she has a team around them that generates high performance.

And there's a lot of data at this point, a lot of studies that show that diverse teams outperform non-diverse teams. And so the ruling is going to remove one instrument that institutions of higher education have to produce diverse classes of graduates.

It's going to make it harder for businesses to generate the diverse teams they need to generate the performance they need to drive the profits. That it is their mission to generate.

You are quoted in an Amicus brief in this case as saying this, it is a significant competitive handicap if these businessmen and women have not been in an educational environment exposing them to people from diverse backgrounds.

What do you suppose then? And I ask you this as a as a guy who sits on corporate boards and a guy who ran a business school, you were the dean at Stern for a number of years.

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