Richard Posner, One Helluva Guy

I recently read the following passage in Solove & Rotenberg, eds., Information Privacy Law (New York: Aspen Publishers 2003) at p. 41. (Sorry if the citation is wrong. Where is my goddamned McGill Guide when I need it?!)

One economic argument for privacy is that sometimes people form irrational judgments based upon learning certain information about others. For example, an employer may not hire certain people based on their political views or associations, sexual orientation, mental illness, and prior criminal convictions -- even though these facts may have no relevance to a potential employee's abilities to do the job. These judgments decrease efficiency. Posner, in his book, The Economics of Justice, offers a response:

This objection overlooks the opportunity costs of shunning people for stupid reasons, or, stated otherwise, the gains from dealing with someone whom others shun irrationally. If ex-convicts are good workers but most employers do not know this, employers who do know will be able to hire them at a below-average wage because of their depressed job opportunities and will thereby obtain a competitieve advantage over the bigots. In a diverse, decentralized, and competitive society, irrational shunning will be weeded out over time..." [emphasis added]

Now, I'm as much of a fan of the law and economics perspective as the next person (*ahem*) but am I the only one who thinks that 1) the above statement is practically inhumane and 2) Posner is a blindly faithful fool if he thinks that irrational shunning will be weeded out in a decentralized and competitive society? Because, yeah, so far that's totally playing out. Or maybe when he says "over time" he means like a really really loooooooong time when we'll all be, you know, dead.