Goldman to Refuse IPOs If All Directors Are White, Straight Men
bloomberg.com
bloomberg.com
None of that is to say that there isn't discrimination, but there is not an equal distribution of individuals in each field.
At least for gender, the evidence is mixed [1].
It’s a complicated question. For example, the evidence is compelling for French companies [2].
[1] https://hbr.org/2019/03/when-and-why-diversity-improves-your...
[2] https://www.sciencedirect.com/science/article/abs/pii/S03784...
http://iranarze.ir/wp-content/uploads/2018/08/E8806-IranArze...
There are quite a few problems with this sort of social science study that make it hard to draw any conclusions. You can't simply see mixed answers and say there's mixed evidence, because such answers aren't evidence to begin with.
A first problem is the standard correlation/causation fallacy. If a company that appoints women to the board is doing better is that because of the benign influence of the woman, or is it the inverse, that companies doing well feel they can appoint a token woman without running much risk? Or alternatively that women are only attracted to the sorts of low-risk companies that already do well, and thus success breeds women rather than vice-versa? Or much more likely still that it's irrelevant and there's something else at work?
A second problem is confounding factors. Many studies don't even acknowledge them, let alone control for them. This paper does better than most: it recognises that some studies are confounded because they compare companies across countries that vary in mandatory-women-on-boards-laws, which is a variant of the above problem. It selects a single country and a timeframe when (they assert) there was no social pressure to appoint women to boards. But this paper is nonetheless still ultimately a pure correlation = causation argument.
A third problem is small sample sizes. This paper claims to use a "large" sample but it's only a little under 400 firms. This is far too small to draw meaningful conclusions from, partly because (again) it's too small a set to control for confounding factors. Yet they claim it's statistically significant.
A fourth problem is social scientists are very bad at stopping when they seem to be measuring noise. The paper says:
For the various attributes, we find female directors who are foreigners, have business training, and with longer tenure significantly negatively correlate with all performance measures. However, female directors’ reputation measured by their media coverage is positively perceived by market investors and is associated with an improvement of ROA and ROE.
(ROA is return on assets, ROE is return on equity).
These sentences make a highly implausible claim, namely, the study authors are able to explain movements of the stock market by measuring "reputation" via "media coverage". Moreover that women with more experience and business training are seen as less capable by investors.
But in any other context I think most people would agree that reliably explaining the movement of stocks is extremely difficult, especially for something as abstract and long term as a change of board members. Has a major stock ever had a large movement because a non-chairperson role on a corporate board changed? I'm struggling to think of one. If these authors were really capable of analysing corporate performance in such detailed ways, surely they'd choose to become very successful investors instead of writing gender studies papers?
This sort of study is pretty common and these days I just write it off. It's not so much a problem with this specific subject but more that there is far too much research being done on a dodgy basis. Vast numbers of pseudo-scientists aren't able to step back and say "we aren't able to model this, we don't know the answer to that question". You get studies that sound clever but are just reporting random results.
0: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364470
1: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3265783
I know you saw this because you responded to it.
https://news.ycombinator.com/item?id=22137885
How can you now pretend the exchange never happened?
That said, if I was to put myself in the shoes of an entitled white male CEO I suspect it would take me about 5 minutes to realise that installing a puppet female, gay or minority member of the board would cause almost no real change. I might even make them Chief Diversity Officer or something.
Second, the downside in the situation you described is having less meaningful insights from your advisors. The impact that good advice could have is enormous, and as far as advisors go, second best advice could be disastrous.
We should be making these decisions entirely devoid of what your gender, ethnicity, or sexuality is. Why is everyone talking about making the outcome more equal instead of making the decision entirely uncoupled from the non-relevant aspects of the individual?
Because unconscious bias is a thing. So is systemic discrimination. Without recognizing that, railing about "equal outcomes" is no more than a dogwhistle.
> We should be making these decisions entirely devoid of what your gender, ethnicity, or sexuality is.
That would be true in a world where opportunity is already evenly distributed. I look forward to living in that world, but it's not the world any of us live in today. As long as that's the case, requiring "color blindness" (or similar) at each separate point in the process only perpetuates the results of previous discrimination.
This is entirely untrue. There is a push to make sure everyone is hired at the same rates in the same fields, regardless of the ratio of people in those fields, the ratio of people qualified to take certain roles, etc. This is absurd, and clearly cannot succeed. The easiest example is software engineering, where a massive majority of the people in the field are men. You can't hire people who are not qualified or interested in the role just because they're women.
A real solution to these issues is to determine why the fields skew to certain demographics, look for and discrimination in that process, and make a change there. This is equality of opportunity, not equality of outcome. Equality of outcome is telling people what they have to do so that things are equal. Equality of opportunity is giving people the choice to follow whatever path they would like to. Equality of outcome is inherently racist/sexist/etc as you bias towards minorities in the sliver of whatever you're looking at.
It would be, but it's also an impossible standard. Who's going to fix inequity in health, education, and other factors that start at infancy? Certainly not a hiring company at the very distant other end of the pipeline. It's not only impossible, but it's not their job to such an extent that they'd get sued for devoting too many resources to the attempt. Systemic discrimination can not be fixed without the involvement of employers, providing good jobs to people from under-represented groups and letting those people bring the benefits back to their communities.
Waiting until those problems are fixed "elsewhere" before employers are required to do anything but turn a blind eye means waiting forever ... but the people exaggerating concerns about "equal outcome" and tokenism usually know that. After all, they're usually the very same ones opposing any of those "elsewhere" efforts too. "Divide and conquer" is the name of the game.
Well, with health... Something like Equality of Opportunity would be provided by universal health care. But to get Equality of Outcome? All I can think of (as an actual 'solution') is randomly killing women (or systemically denying them health care) to make sure that the average lifespans of men and women match. (We don't have a way to extend the life expectancy of men by 5 years to match that of women - if we did, we'd already be using it, and it would probably work for women too - so the only way to make things 'equal' is to reduce women's life expectancy by that same amount)
That idea is a victim of the psychology replication crisis actually:
https://www.thecut.com/2017/01/psychologys-racism-measuring-...
So not really a thing, no.
Is there any single experiment or study that would show this? If not, how many - and what would they need to cover?
Simply untrue. Even Patrick Forscher, one of the authors of the IAT critique that has become such a popular anti-diversity talking point, doesn't deny that implicit bias is real. Questioning the accuracy of one measurement is not the same as "no supporting evidence" let alone "junk science" and your use of those phrases only betrays that you're trying to argue from a basis other than fact.
What you are in essence arguing for is free marketism. Unfortunately we are all painfully aware of the myrad of ways free markets fail on things which are not directly incentivised towards. The environment, safety and protection of minorities are all things which need special protection.
You don’t want a doctor to treat you for cancer unless he himself has had cancer? - Milton Friedman
Going back to the original point, I said my opinion as a white-cis-straigh-male carry less weight than someone who is part of those groups. I certainly haven't studied the statistics and I haven't lived the experience. I'm not sure why so many people feel I should have more blind faith in my own opinion; I said nothing about the weight of their opinion.
A female researcher doesn't add anything to a study on ovarian cancer or detract anything from a study of testicular cancer because of her gender. Her anecdata is worth zero in both case, her actual data is what counts.
If she tries an argument from authority (credentials or gender) her credibility is shot. Either the data supports her conclusions or it does not.
You don't see how a woman could help a study on ovarian cancer?
Help point out procedure that's demeaning or inconvenient, point out "common sense" correlations? Even just have someone with an additional dimension of empathy for the subjects of the study.
It doesn't mean she detracts from the study about testicular cancer, it means she adds to the one about ovarian.
People don't seem to understand that the world doesn't operate on facts alone, and that it's not some failing of logic to take "feelings" into account in a process trying to come to a logical outcome.
Not doing that is how companies end up making tone deaf decisions that were supported by the facts in their narrow view, but not the actual reality of the world
Ideally, this forces people to expand their search/search harder for qualified people. Simply "ticking the boxes" would probably be risky for the company, as you have no idea on if they're the right person.
Right now though, it's too easy to say "we found the most qualified person" while not putting in any significant effort to look outside of the easiest pool of candidates. The easiest pool of candidates isn't distributed equally over several axes (like race and gender), so you're less likely to find candidates from marginalized groups there.
To fix that distribution issue, there has to be a forcing power that requires people to look outside of that easy pool of candidates.
Assuming there is no racial bias in the selection process, if the pool of people you're choosing from is more diverse and you still end up with a board of white straight males because they were the most qualified in that pool, is that a problem?
Posted where? In what publications, at what position, for how long? "Token posting" to comply with the letter of open-posting requirements while defying their intent is already a thing.
I doubt most directors at companies going to IPO with Goldman Sachs are chosen from applicants to an online job listing.
If 90% of the total pool has a largely similar background, and you find 20 candidates without controlling for diversity (my "easy pool"), you'll have 2 candidates with a diverse background. Now even if you could do a merit based selection on that, you'll most likely hire from the 18. If you put more effort into sourcing from the 10% you should be able to get, for example, 10 candidates from the 90% and 10 from the 10%.
> if the pool of people you're choosing from is more diverse and you still end up with a board of white straight males because they were the most qualified in that pool, is that a problem?
Not necessarily. I don't entirely believe people can pick purely on merit, but assuming you could, that would be a reasonable result to end up with.
Though there is an argument to be made that a more diverse board could lead to more inclusive decision making. That in turn could lead to your company being appealing to both more diverse candidates and more diverse customers. More customers is more money. Not sure that I believe that should be the only goal, but it's.
This argument is the core intellectual justification for this kind of anti-western-male discrimination but it's unsound.
If we handwave away the uncertain definitions of "diverse" and "inclusive" then it boils down to women should be on corporate boards because they will force decisions to be made that are better for women. Is this legitimate?
If there was widespread unfair discrimination against women by corporations then you could argue this would tip the balance back to equality, assuming you could precisely measure the appointees pro-women/anti-man decisions and figure out when there was 'enough' such decision making. But as we can see from this story the reality is the opposite: there's widespread discrimination against men in our society, not women. I don't remember ever reading about women being denied jobs outside of special cases with physical strength requirements like the military, and even then, not anymore.
So what is more inclusive decision making meant to mean, exactly? Corporations are not refusing to sell products to women today, or refusing to promote women. Quite the opposite.
Unfortunately my experience of 'inclusive' decision making in corporations is that it's a double-speak inversion. It really means excluding and discouraging people based on how they were born. If appointing women to boards is meant to create more of this then we can assume it's not really "female/diverse" they're going for but rather people with a specific ideological bent.
Goldman Sachs, enforcing leftist wokeism on the world via financial discrimination. What kind of a topsy turvy world are our sons being born into?
Does that make sense? I'm honestly trying to bridge the gap between what I hear a lot of people's views are and what mine are.
So “ticking the boxes” is risky, but right now it is too easy to just add candidates?
How can you square those statements?
Define "valuable" please. Do you mean increasing monetary value for one company in the short term? As it turns out, even that answer seems to be that yes, more diverse boards are valuable. Even more importantly, they're likely to be valuable across all measures (e.g. including worker satisfaction) and all companies in the longer term. Diversity brings perspective, which means better understanding of product opportunities and limitations. It improves connection with equally diverse customers and lower-level employees too. Over time it expands the pool of people who already have the experience and connections to succeed at their next job, and the top N% of a larger pool will outperform the top N% of a smaller one.
There are all sorts of reasons why a "diversity hire" might still be better for a company despite having infinitesimally lower grades at an infinitesimally less prestigious school, so "the best people for the job" probably doesn't quite mean what you think.
Having a single homosexual person to remind you that having the picture postcard white hetro couple in all of your adverts isn't very inclusive.
Heck, some of these things might even cost you money but they are the right thing to do and requiring one person on the board to have some kind of diversity is an incredibly low bar.
Absolutely I want the best person for the job. How do you measure that? What's the metric? Years of experience, years of relevant experience, whether or not it says "Google" somewhere on their resume, height, attractiveness?
Sure some of my examples seem crazy but studies show that taller, attractive people are generally more successful.
There's no accurate measure you can use to assess "best" reliably. A lot of hiring is rather a lot more subjective than anyone admits. Not my employer though, we only hire "the best".
A significant factor for height is nutrition, which is why average/median height increases often accompany increases in prosperity. It's only among the already-prosperous that genetic factors come to the fore.
Let's look at attractiveness. Of course diet and exercise help Does everyone have the same dietary freedom or metabolism? Does everyone have the same capacity for exercise? Of course not. There are literally thousands of medical conditions that can have an effect here, as well as social factors. Is a particular color/texture of hair or skin more attractive? Both genetics (including race) and medical conditions can render someone "less attractive" by those measures. Then there's makeup, clothing, social norms (of which "thin is in" is a particularly pernicious example), etc. Implying that attractiveness can be a proxy for discipline is absurd. Why would anyone try to excuse "pretty people" bias?
This isn't about hiring "the best", it's about hiring the best that you can find. And evaluating that is totally subjective. But you know what isn't an objective measure of "the best"? If your skin looks different than mine. That's a measure of almost nothing about the quality of your character, work ethic, or intelligence.
But I grew up in Asia (I am Asian). My ethnicity is also a minority there. I came to the US 10 years ago, and had some cultural shock regarding racial and diversity issues.
First, my jokes were mostly offensive to people here. We grew up making jokes about marital status and body image. We told people things like "you're so fat, you need to lose weight", and "why are you still single?" and no one was ever offended. Little did I know that things are different here.
But, the second one was quite surprising. I had a conversation to a female friend. She was telling me that she wanted to go to a business school. I asked why business school, and her another female friend immediately intervened and answered angrily "oh why not? because she is female?" and I was like "what just happened?" because I was confused. That was one instance, and there were other instances where I was accused of "mansplaining". I had to google what that keyword was because I thought I encountered a new English word that I didn't know that I need to add to my vocabulary.
Also during my conversation with (mostly Asian) friends here , they sometimes brought the topic of "Bamboo Ceiling" and I was honestly didn't know what was that about until I googled it.
To be honest (and this is where I think I would be down-voted), I've never experienced such a thing called "Bamboo Ceiling" or I have to be white to be successful (well, the definition of successful varies between people) and I just go on with my life as usual, thinking that such ceiling is just some imaginary ceiling made by my (mostly Asian) friends.
But I do aware of the impact of diversity programs against Asians. We're dime a dozen lol.
Unfortunately we live in an age when "white people" and men are unjustly blamed for many things, and the confluence of this blaming culture leads to the demonization of white men. This demonization is encouraged by many in the media, academia and HR departments. It masquerades as virtuous and "progressive" when it is just the opposite. People are reluctant to call it out for what it is because they are afraid of being slandered as racist or sexist.
Policies like Goldman's, while well intended, are ultimately regressive, racist and sexist. When we reduce individuals to their race and gender we fall farther back into the dark ages when these things mattered far more than they do now. Rather than running away from that time towards a world of equality and universal justice, these policies drag us back and breed only resentment and mutual distrust.
>resentment and mutual distrust
which of these goals do you think an entity like Goldman Sachs is more likely to pursue?
Anything that forcibly makes boards larger is probably bad for companies, regardless of the goodness of intentions. If you do not believe requirements like Goldman's will increase board sizes, then you must believe that all companies are willing to fire some number of current board members to meet quota, which seems unlikely.
Peter Thiel in Zero to One:
> A board of three is ideal. Your board should never exceed five people, unless your company is publicly held. (Government regulations effectively mandate that public companies have larger boards—the average is nine members.) By far the worst you can do is to make your board extra large. When unsavvy observers see a nonprofit organization with dozens of people on its board, they think: “Look how many great people are committed to this organization! It must be extremely well run.” Actually, a huge board will exercise no effective oversight at all; it merely provides cover for whatever microdictator actually runs the organization. If you want that kind of free rein from your board, blow it up to giant size. If you want an effective board, keep it small.
More board members may increase intransigence, decrease oversight (cover over who is really making the decisions and who is not), and turn corps more bureaucratic. Regardless of who is joining the board, this is going to increase board sizes, and that's pretty unfortunate for some philosophies of effective management.
It is not that [xyz] representation isn't a problem, but that an effective company structure must be the foremost requirement, ahead of any other (more arbitrary or ephemeral) requirements. Or else there won't be as many great companies to steward in the first place.
All Asian board in Asia? Fine.
All African board in Africa? Fine.
All European board in Europe? No! That's unacceptable for some reason.
Why can't we simply treat people by their character and merit instead of things like race, sex or sexual orientation when those things have nothing to do with whether you can run a business or not? This rule is the definition of racism and sexism. Also how exactly do they plan on figuring out whether someone is straight or not?
As a brown immigrant, I have seen a lot more racism towards white people than others.
“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” ― Martin Luther King Jr. 1963
"If you’re not prepared to come to that table and represent that voice, don’t come, because we don’t need any more brown faces that don’t want to be a brown voice."
"We don’t need black faces that don’t want to be a black voice"
-Congresswoman Ayanna Pressley, Massachusetts 7th
You have been found guilty of wrongthink, please report to the Ministry of Truth for reeducation.
The GP's comment was fine for HN because it was grounded in specific personal experience. This comment is bad for HN because it's just inflammatory talking points. Please don't do those here.
> Public companies with all-male boards based in California now face a $100,000 fine under a new state law.
Discrimination is not right because you think you have the right motives, the law is also very clear about this.
That's literally what affirmative action is.
No, it's not. Affirmative action does not prevent any company from hiring any white/male/etc. people. All it does is preclude them from hiring only such people when there are qualified minority applicants. Equating a preference (even a mandatory one) to a total exclusion is specious, as is equating situations with and without specific ability-to-perform requirements. It's a false analogy.
That is affirmative action. Don't believe it? Look at the data unearthed from admissions data provided during the Harvard AA lawsuit. Asians must pass a much higher bar than certain other groups.
The question is, if it's not ok for the Country Club, why is it ok for Universities?
This is the government FORCING affirmative action and is most likely unconstitutional.
Corporations have run roughshod over our laws and society for too long. If this sort of law can improve their behavior, I'm all for it.
International Review of Law and Economics
https://www.sciencedirect.com/science/article/abs/pii/014481...
The general movement to joint stock enterprise could not take place until certain economic and legal changes had been effected … The legal change was the substitution of the law of corporations for the law of partnership in company affairs. Investors could then invest safely and full exploitation of the economic changes became possible.
Of course, no thinking person needs to read a legal brief to realize what a gigantic difference exists with respect to liability, between partnerships and corporations. No actual human being is ever held responsible for the evil done by corporations. Therefore, they continue to do more and more evil. Every time we complain, we're lectured that "their only responsibility is to their shareholders!" If that's the case, it's not because God wrote that on a stone tablet. It is directly a result of the statutes that create the corporation. The laws that legislatures pass, they can change.
https://www.npr.org/2018/10/01/653318005/california-becomes-...
https://www.washingtonpost.com/business/2019/11/14/this-stat...
It's hard to keep track sometimes.
/s. This is whack.
Not sure being "woke" makes up for fucking the US economy, but hey, Twitter seems to bear a disproportionate weight, so I'm not the best arbiter of value.
But this seems like blatant window dressing from a predatory firm.
Goldman Sachs?
https://www.goldmansachs.com/our-firm/leadership/board-of-di...
> Wall Street's biggest underwriter of initial public offerings in the U.S. will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse.
If I've understood correctly, the requirement is:
NOT (ethnicity=caucasian AND gender=male AND orientation=hetrosexual)
EDIT: Ignore my above, it suggests that no white straight males are acceptable, which is incorrect. See comment below (https://news.ycombinator.com/item?id=22137842)
NOT (ALL(d.ethnicity=caucasian AND d.gender=male AND d.orientation=hetrosexual for d in directors))
It's not like Goldman won't do business with any company with straight white men on their board.
Can white-man now sue company for racism because board of directors didn't hire him? Does this mean, now minorities are considered as an elite group of people?
P.S. I tried to remember when I last time looked at sex of job applicant. Couldn't remember any case, now I should be careful and reject white man (just in case)
This is literally insane as a "law" and erodes trust in law.
This sort of misandrist heterophobia isn't entirely new. I encountered an organisation with the same "no straight white men" policy and the way they did it was by insisting you present evidence of your sexual orientation from Facebook or similar. Really.
Anyway, always worth revisiting the Fields’ sisters book, “Racecraft” about how racial identity is not inherent to people, but imposed as post hoc justification for the socioeconomic order:
https://www.penguinrandomhouse.com/books/233136/racecraft-by...
Clown world.
I grew up pretty damn poor. Anyone that looked at me as a kid would have said I had no future at all. I picked myself up and worked hard, sacrificed good times, and cut as many financial corners as I could for too many years. It's been a fucking grind. Regardless of my skin color, it was no cake walk, I felt very little "privilege" as the accusation goes. It was just work, endless work. Especially bad was coming behind the Boomer generation that absolutely hated my guts just for being young. You might say mentors were few and far between and every time I reached out, I got my hand slapped. I was looked at (and still am looked at) as a labor commodity and little else.
Also, it is truly hilarous to me that Goldman Sachs, the bank that the US Govt. BAILED OUT during the financial crisis, a bank largely run mostly by people of a certain ethnicity, has any moral standing whatsoever. These fools should be out of business for what they did, not laying down this crap!
Also BlackRock--what a POS company that is! They came in to a well regarded local firm and absolutely gutted it. Want to know why? PENSIONS. They had to get rid of anyone with a pension, so they did all kinds of miserable fuckery to pull that off.
> The mandate is the latest in a series of signals that non-diverse boards and management are unacceptable. BlackRock Inc. and State Street Global Advisors are voting against directors at companies without a female director.
BlackRock AUM: ~$6.9T, State Street AUM: ~$2.8T, Goldman Sachs AUM: ~$1.5T.
(Morgan Stanley AUM ~$2T, JPM ~$2.6T)