The issue of Affirmative Action is discussed, identifying some difficulties with the way that this policy has been pursued in the past: Racial preferences can be a poorly targeted method of closing the gap in social status between Blacks and Whites, and can have negative unintended consequences for incentives and for the reputations of its beneficiaries. Nevertheless, it is argued that some form of affirmative action continues to be needed. The concept of "developmental affirmative action" is introduced. This form of racially targeted policy focuses primarily on the enhancement of competitive skills. In so doing, it avoids many of the aforementioned difficulties.

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