The Fiscal Strategy of the Feminist Left: Fines and Ultimatums
It’s old news by now. David Solomon, CEO of Goldman Sachs, has laid down the gender law, stating at the World Economic Forum in Davos that the investment giant will not “take a company public unless there’s at least one diverse board candidate, with a focus on women.” The scuttlebutt is that the investment bank is trying to redeem its “vampire squid” reputation, cleaning up the fallout from the notorious 1MDB scandal implicating seventeen former and current Goldman executives. In addition, the firm is obviously catering to the “social justice” trends of the day, with its emphasis on so-called “diversity”—women, gays, people of color—at the expense of straight white males. As William Sullivan writes in American Thinker, what we are witnessing is “an openly discriminatory policy to pacify the woke mobs.” The new news would have to do with whether Goldman Sachs’ largest competitors, JPMorgan Chase and Morgan Stanley, decide to follow suit.
Solomon goes on to claim that “the performance of IPOs where there's been a woman on the board in the US is significantly better than the performance of IPOs where there hasn't been a woman on the board.” This avowal is meant to function as justification for its clearly prejudicial policy by appealing not only to conventional sentiment and presumably “better governance” but to fiscal considerations, higher profits and overall improved performance, “help[ing] to move the market forward.” Woe betide an all-white, straight male Board, regardless of fiduciary competence and market effectiveness.
California Senator Hannah-Beth Jackson is an emphatic ally, having concurred with former governor Jerry Brown’s bill “making California the first state to require public companies to have at least one woman on their board of directors to advance gender equality.” Corporations, she declared, “will be more profitable” once they diversify their Boards of Directors and hire women. As reported in The Mercury News, “The legislation would mandate that all publicly traded California companies have at least one woman on the board by the end of 2019. By the end of 2021, it calls for at least two women on boards with five directors. At least three women will be required on boards of companies with at least six directors. Companies that don’t comply will be fined $100,000 for their first violation.” Jackson gushed: “This is a giant step forward for women, our businesses and our economy.” Companies would be “more successful, more productive, more profitable” when they add women to boards.
Ay, there’s the rub! Is it really the case that having women on corporate boards will generate higher earnings, that women are especially revenue-friendly and likely more astute than men? Or is it merely another piece of feminist hyperbole that is inundating the culture? On the face of it, such claims make little sense. Are we to assume that the female brain, or female “intuition,” operates at a higher level of proficiency than whatever expertise or astuteness males bring to the table? The evidence for such airy proclamations is statistically dubious, though of course the data will be hyped, amplified or at least “mixed.”
Moreover, there are too many hidden variables to unequivocally support such claims, for example, cherry-picking data, women applying to more successful companies, companies hiring women to avoid scrutiny, and all-female companies that have spectacularly failed, as reported in the Daily Mail, ResearchGate, Connected Women and many other places—although one must expect a host of exempting and self-justifying factors to account for the problem.
A plethora of impartial surveys suggest that male/female differences in boardroom aptitude are minimal or non-existent and that the argument that women outperform men is disingenuous and opportunistic. According to a meta-analytical study of board diversity with a combined sample of more than 90,000 firms from 35 countries, the average correlation between gender diversity and market performance is statistically insignificant. The research also suggests that gender-diverse boards make fewer mergers and acquisitions than all male-boards. The Strategic Management Journal predicts “that greater female representation on a firm's board will be negatively associated with both the number of acquisitions the firm engages and…acquisition size. Using a comprehensive, multiyear sample of U.S. public firms…[w]e demonstrate the robustness of our findings through the use of a difference‐in‐differences analysis on a subsample of firms that experienced exogenous changes in board gender composition.”
Surely the composition of a corporate board should be based on the principle of maximizing profits via fair business practices, not on a ground of cultural shibboleths and gender politics, that is, postulates that derive from purely extraneous conditions of race, sexual orientation or “gender” (read: biological sex)—in other words, “diversity.” If Robert Putnam’s findings in his major study of 30,000 people in 41 American cities are correct—though the study has been disputed—diversity leads to a drop in “social capital.” Putnam treats of “ethnic diversity,” but the prospect of “harmony” and fusion” resulting from indiscriminately mixed groups is contradicted by a pervasive sense of discomfort, wariness and distrust.
Higher diversity, Putnam writes, leads to “lower confidence in local government, local leaders and the local news media … less expectation others will cooperate to solve dilemmas … less likelihood of working on a community project …It would be unfortunate, “he continues, “if a politically correct progressivism were to deny the reality of the challenge to social solidarity posed by diversity.” Author of the bestselling Bowling Alone, Putnam is an undoubted liberal who believes in “creating more opportunities for meaningful interaction across ethnic lines,” but there is no question that the diversity myth cannot be taken at face value. In particular, what we may call “forced diversity” is totalitarian both in principle and in fact, as well as dysfunctional in the long run, a caveat that applies to social justice advocacy in general and feminism is particular.
Feminism is already responsible for the ruination of sexual and family relations, the despoliation of the university as a place of learning and scholarly rectitude, and the ongoing corruption of the justice system. It is now intent on demonetizing the business sector with punitive fines and the threat of market suppression for the sin of non-compliance with its agenda. The free market is no longer free.
It should go without saying that a corporate board can be as “diverse” as it likes provided it honors its mandate of profitability and responsibility to its shareholders. But it cannot rely on unfounded presuppositions, cooked data and a policy of compulsion. It cannot prosper when beset by fines and ultimatums. The same is true, of course, for a society or a nation, otherwise this is how an entity of any size, composition or organization goes to DIE (Diversity, Inclusion, Equity).
As Martin Luther King famously said, “There is nothing more dangerous than sincere ignorance and conscientious stupidity.” People like Solomon and Jackson may (or may not) be sincere and conscientious but they continue to strike me as ignorant and, if not stupid, certainly stupefied by unthought-through dogmas and feel-good assumptions. “Diversity” as currently understood is an unproven benefit and may well bring a destructive influence to bear on the institutions, corporations and societies that uncritically adopt its mantra of perfection. In a landmark paper entitled Fractionalization, Harvard economist Alberto Alestina et al. persuasively argued that greater diversity is a weakness often leading to stunted economic growth. Success by any measure is predicated on the positive criteria of excellence, skill, diligence and compatibility, irrespective of race, sexual orientation or “gender.” These criteria are precisely the touchstones to which the social justice crowd—cultural Marxists, postmodern relativists, progressivist legislators and feminists in particular—are programmatically indifferent.
Indeed, feminism is hell-bent on crippling an entire democratic society: its marital structure, its intellectual life, its social media, its professional echelons and now its business practices. We may already have passed the cultural inflexion point. But one thing is sure. If we do not belatedly come to our senses and act to reverse its malignant momentum, the collapse of culture and nation will become inevitable.