I teach the economics of discrimination every chance I get. Why? Because the analytical framework, launched by the great Gary Becker in 1957, mightily illuminates so many questions that we care so much about. When you see that almost all garbage collectors are male, for example, what should you conclude? Perhaps women and men are equally able and interested in collecting garbage, but employers in the industry dislike women. Perhaps male garbage collectors don’t like working alongside women. Or perhaps customers don’t want women to touch their trashcans. Alternately, perhaps men are better at collecting garbage than women. (Statistically!) Or maybe women dislike this line of work more than men. (Again, statistically!)
One of these stories might be the whole truth; all five could have some merit; or anything in between. The analytical framework can’t tell you the breakdown; you need empirics (and good judgment) for that. Yet without Becker’s analytical framework, empirical researchers wouldn’t even know where to start.
One of the main insights of this Beckerian framework is that discrimination creates profit opportunities. That includes employer-on-worker discrimination, worker-on-worker discrimination, and consumer-on-worker discrimination. If most employers dislike workers in group X, depressing their wages below their productivity, employers who feel differently can profit by hiring them. If most workers dislike workers in group X, similarly, employers can profit by giving the disliked workers “a firm of their own.” If most consumers dislike workers in group X, employers can profit by keeping disfavored workers out of the public eye. This doesn’t mean that market forces transform bigots into models of tolerance, though perhaps they do that too. What the Beckerian framework implies, rather, is that market forces help neutralize bigotry’s effects. With the right incentives and strategies, intolerance can be both prevalent and impotent.
Most research on the economics of discrimination focuses on race and gender, but Becker’s framework works equally well for political bigotry. Which raises a series of awkward questions for anyone troubled by the rise of corporate-sponsored “social justice” in general, and “cancel culture” in particular. In the current office climate, even many life-long left-wingers fear the career consequences of publicizing their doubts about evolving left-wing orthodoxy. They’re afraid to share their views with co-workers, and afraid to express themselves on social media because their co-workers might find out. Moderates and right-wingers feel an even stronger need to keep their political views to themselves. Cutting-edge leftists, in contrast, now feel empowered. When they speak out on the job, employers seem attentive and responsive.
This is not what the economics of discrimination would make you expect. After all, the labor market is full of right-wing workers. If left-wing employers don’t want to hire them, you would expect both pragmatic and right-wing employers to pick up the slack. If left-wing workers don’t want to toil alongside right-wing workers, similarly, you would expect both pragmatic and right-wing employers to tacitly create politically segregated workplaces. If left-wing consumers don’t want to buy products from right-wing firms, finally, you would expect both pragmatic and right-wing employers to keep politically disfavored workers out of the public eye.
In the real world, however, it seems very hard to find businesses that warmly cater to moderate and right-wing workers. Sure, you can work for a right-wing think tank, a conservative church, Fox News, or Republican-allied lobbyists. And I just visited a decidedly right-wing gift shop in West Virginia; it really stood out! Yet all such establishments sum to a tiny sliver of GDP.
I understand, of course, why few businesses warmly cater to libertarians, or theocrats, or monarchists. There aren’t enough monarchist barbers to economically justify a monarchist barbershop. Where, though, are the firms where Republicans don’t look over their shoulders before they say they’re pro-life? Where are the firms where moderates don’t look over their shoulders before they declare that affirmative action has already gone far enough? Where are the firms where males don’t look over their shoulders before they express solidarity with the latest target of #MeToo? Billions of 360-degree glances look like a massive profit opportunity. Why then are so few businesses trying to capitalize on said opportunity?
Let’s name and ponder the leading explanations.
Explanation #1. My summary of the political climate of American business could be flatly wrong.
Tentative evaluation: I doubt it, but I freely admit that my data is poor.
Explanation #2. Perhaps I’m missing geographic variance. Maybe leftists bully the right in firms in the Northeast Corridor and California, while rightists bully the left in firms in the South and Texas.
Tentative evaluation: There is probably some truth here. There must be plenty of firms in the South and Texas with minimal left-wing propaganda. Still, are there really many where the Human Resources Division hails meritocracy and condemns hypersensitivity?
Explanation #3. Perhaps I’m missing occupational and/or industry-based variance. Leftists rule academia, and dominate law and tech. But the right rules a bunch of other prominent occupations and industries.
Tentative evaluation: I struggle to convincingly name more than a handful of such occupations and industries. In the past, you might say “doctors.” Yet these days younger doctors seem like typical left-wing elites. Engineers, similarly, seem more politically apathetic than right-wing.
Explanation #4. Few moderates or right-wingers care enough to create a major profit opportunity. While they don’t relish looking over their shoulders, they prefer their current job to an alternative where they can shoot their mouths off but earn a $1000 less per year. In this story, the left proverbially just “wants it more.” And as usual, the market takes the intensity of conflicting preferences into account.
Tentative evaluation: Very plausible, especially considering how strong the age-ideology correlation has become. When today’s conservatives encounter politics on the job, they don’t start polishing their resume to find a more politically hospitable home. They tell themselves, “I’m too old for this @%!&!” and get back to work.
Note: A slight variant is that left-wing consumers are more willing to boycott firms they dislike than right-wing consumers. The media’s liberal bias could easily amplify this: The left is more likely to hear about corporate policies they find objectionable than the right. (Though this in turn raises the question, “Why does a highly competitive media market lead to such pronounced left-wing bias?”)
Explanation #5. Discrimination law covertly stymies the creation of right-wing firms. Most obviously, any firm that openly and aggressively opposed #MeToo and #BLM would soon be sued into oblivion.
Tentative evaluation: Even more plausible. Imagine what would happen if a firm’s top brass loudly declared that, “Discrimination simply isn’t a problem here” – and routinely fired complainers for contradicting the party line. Picture a firm blanketed in propaganda telling workers to “Be color-blind,” “Laugh it off,” and “No one likes a tattle-tale.” A small business in a conservative area might get away with this for a few years, but a Fortune 500 company that stuck to its right-wing guns would go down in flames. This does not prevent firms from promoting a mildly right-wing corporate culture, but you won’t attract many politically homeless workers with such marginal improvements.
What’s the real story? Any possibilities that I’ve missed? I especially prize answers based on first-hand work experience outside of academia…
READER COMMENTS
Saint Fiasco
Sep 22 2020 at 11:37am
We could check one by one all the ways employers can take advantage and see why they are not doing that.
I guess this doesn’t happen because it’s not employers who dislike X, it’s consumers and co-workers.
I guess this does happen for some firms, but most of the “cool” firms that you hear about on discussions about cancel culture are big, sophisticated, multinational firms with lots of moving parts. If your firm requires many different types of workers to function, and especially if some of those types are overwhelmingly left-wing, then you can’t just fill your firm with cheap right-wingers. And since you’ll have to get both kinds of workers anyway, you’ll have to force them to get along and the cheapest way to do that is to support the orthodoxy and tell the political minority to stay quiet and get back to work.
Also, if you go to the trouble of separating your firm into smaller firms so you don’t have to worry about worker diversity so much, you might as well go all the way, take the part of the firm that would benefit the most from cheap labor and outsource it to India or wherever. When it comes to workers who are so irrationally discriminated against that you can make a huge profit by hiring them for cheap, it’s hard to beat workers from Third World.
I guess this does happen a lot with the “politically apathetic” engineers. But again, what is more profitable, teach your American right-wing engineer to shut up about politics, or teach your Indian outsourced engineer to hide their accent?
Santiago
Sep 23 2020 at 12:27am
Tullock’s Bureaucratic filter. Most management is trained in academia (first filter). At large firms there is a greater amount of bureaucratic management that is harder to monitor in terms of efficiency and subject to efficiency criteria (filter). There should be a profit opportunity, if and only if monitoring effort pays off but at large firms we are already at frontier. Empirical implications, 1. larger firms, 2. industries in sectors with greater regulatory compliance costs (and other burdens that increase bureaucratic management), 2. upper management (compared to lower management), 3. publicly held companies (greater monitoring costs) should have smaller amounts of ideological diversity and lean left.
hsb
Sep 25 2020 at 4:46pm
I agree entirely with this. I would add that this is one (of several) reasons to re-think our approach to anti-trust law. Consumer prices are not the only issue — maybe not even the most important issue — at stake when Big Business gains power.
Zach
Sep 22 2020 at 11:41am
An observation from a public utility in a conservative, rural area: Craft personnel (mechanics, operators, linemen, …) tend to be right-wing and vocal, engineers and admin split more evenly but tend to be less vocal, human resources and public affairs tend to be left-wing and vocal. Human resources might desire to force their left-wing culture on the entire company, but appear to be tempered by the large number of vocal right-wing employees that would certainly push back.
Daniel Carroll
Sep 22 2020 at 11:58am
The problem with the Becker hypothesis is that it ignores the institutional arrangements and embedded incentives. Segregation and discrimination persisted for so long because not only of formal legal structures, but informal legal and quasi-legal structures that also enforced it. While the institutional arrangements have changed, law and education continue to be applied unequally.
Today, corporate America is concerned with public image and legal liability, as well as employee morale. So it polices anything that might offend anyone. That said, I’ve worked in the financial industry for 25 years at large and small firms, and not come across the problem you describe. Excessively rude and inconsiderate behavior (including overtly sexist behavior) is generally not tolerated, but neither is ideological purging. But, then, in finance, you generally lose money if you embrace fiction over fact.
In Texas, I do come across a lot of right-wingers, especially small business owners. My (former) dentist likes to pontificate on his pet right-wing political theories while he has his tools in your mouth. My neighbor, who is a successful small business owner, is (still) a hoaxer. Not to mention friends in engineering, oil and gas, and construction who range from right-of-center to left-of-Hitler, and are not shy about expressing their opinions. My zip code went 60% for Trump in 2016.
Gary Lowe
Sep 22 2020 at 12:05pm
I am a lawyer at a large Silicon Valley firm (although it’s not one of more well known ones) and we have adopted some of the diversity rhetoric and have had some rudimentary implicit bias training.
However, having worked in corporate America for over 30 years, the efforts feel like every other corporate program I’ve been through: you go through the motions, check the box and and the company, and in particular HR and legal are happy. After the training is over, you rarely think about diversity (or whatever the issue was) and people don’t talk about it much at work. I honestly don’t see almost any real discussion of SJW issues at work.
My guess is that outside of places like Google and Facebook, what have workforces that skew younger, most diversity rhetoric is corporate window dressing and so if you are a conservative you can nod your head and then not think about it at all.
Now if, as a conservative, you wanted to press the issue you would probably meet with some resistance, but I think most companies take actions that you can easily ignore while you are making very high wages.
Isabel
Sep 22 2020 at 12:07pm
I agree with Zach. I work in OEM. We don’t talk politcs very often, but it’s clear most of my coworkers are conservative/RW when they care to comment at all.
Not only that, but we manufacture higher order goods; I would be surprised to hear that any client (end user or business) was very progressive. The effects of public pressure and boycotts are weak if you don’t sell to the public.
It’s a heavily male industry serving other heavily male industries. Thing of right wing majors; are you going to hear about the politics of the engineers designing your car/phone/sewer system?
Where are the right wingers? Upstream and out of service industries.
James
Sep 22 2020 at 12:14pm
Some other explanations:
Everything that was good about conservative culture has already been embraced by the people in left wing firms. Fundamentalist religion and various forms of prejudice are the only uniquely conservative traits. No one who believes in that stuff is a desirable employee or smart enough to build a successful business. There are some decent conservatives out there but they are such a small talent pool that the cost of excluding them is small. If I were a lefty, I would find this explanation appealing.
The firms that have become the most visible for imposing left wing culture in the workplace all make money by doing stuff that the left generally objects to, e.g selling data on their customers, aggressive advertising, resisting unionization, sophisticated tax avoidance strategies, hiring based on technical skill and winding up with mostly white male and Asian male employees, etc. So the moderately left wing people running those places feel the need to placate their own consciences. Right wing business leaders feel no such guilt over how they run their businesses.
Market processes just take time and at some point in the future we will see either the formation of firms with deliberately conservative culture or a dialing down of woke culture within the prominent west coast tech firms.
Kevin
Sep 30 2020 at 3:41am
James, while much of what you wrote is reasonable, I think you diminish conservatives far too much. What makes you think conservatives are a small part of the talent pool? You don’t think they make up AT LEAST a third? Is that small?
Knut P. Heen
Sep 22 2020 at 12:32pm
Maybe right-wingers and left-wingers select into different sectors. Left-wingers into the people sector (consulting, medicine, Hollywood, etc.). Right-wingers to the machine sector (oil, chemicals, construction, etc.). We tend to get our impression from the sector that is in direct contact with the consumer. I can imagine that the crews of oil-rigs or fishing vessels have a different opinion on many issues.
Michael Pettengill
Sep 25 2020 at 5:03am
My thought, too.
Conservatives are into coal, coal heating, coking plants creating smog, steel mills turning fresh snow gray overnight, favorite hunting mountains blown up and flattened to get thin seams of coal, killing jobs, slashing wages to cut costs and boost profits.
Leftists are into solar roofs, building Gigafactorys the are that increase global battery production by 50%, really fast electric cars, bigger and bigger rocket, and getting very rich killing off fossil fuel companies, while creating lots of new jobs doing things never done before. Or figuring out how to get every product produced to any customer anywhere and faster than Sears did it a century earlier.
Conservatives were into making Sears the most profitable retailer by cutting costs, just like Friedman told them.
Leftists are into making Amazon, Tesla, SpaceX, bigger in revenue, employees, customers, and not profits, a message repeated to shareholders constantly, just as Keynes argued was the ideal capitalism.
Julian
Sep 26 2020 at 5:58pm
Please be kidding. Musk is no leftie, and vocally so. And how can you associate Bezos whose company devotes a lot of resources into breaking up unionization and has a substantial proportion of low-wage employees? It’s been rumored that Facebook founder actually leans conservative. It’s just ridiculous to call people who go into solar panel production lefties with such confidence.
Kevin
Sep 30 2020 at 3:46am
You’d might as well just say leftists are smart and anyone who disagrees is dumb. You assume far too much. The left hardly has a monopoly on innovation and revenue growth.
Mark
Sep 22 2020 at 1:40pm
The vast majority of businesses are completely apolitical and will hire any employee who is qualified and sell to any customer who can pay without thinking about their politics. (Of course if said employee is very outspoken and disrupts others that is a different story). I think the normal Beckerian argument against discrimination works perfectly intact here and just implies that there is not pervasive discrimination against conservatives in business.
Michael Pettengill
Sep 25 2020 at 5:38am
But if your current workers critical to daily operations won’t work with a great job candidate that’s female, black, gay, trans, Muslim, you need to be looking to a long term goal where you hire lots of new more tolerant workers.
There are businesses that go under because they can’t make the change, say mens fashion. Eg, the bespoke business wear, failing to go off the rack, then failing to go business casual. Conservative men’s attire just couldn’t adapt. Workers who embraced conservative politics of cost cutting would pay for conservative quality bespoke attire. Liberal diverse workers making a fashion statement rejected the conservative fashion, but would love quality bespoke attire that make a statement, and pay for it.
Kinky boots is a musical based in reality.
Eric B Rasmusen
Sep 22 2020 at 4:06pm
Till recently, corporations didn’t fire employees for their political views, or try to indoctrinate them, did they? Certainly universities have become far less tolerant of dissent, even though they were always massively liberal. So it looks like a change in liberal tastes– liberal executives are much more willing to sacrifice company income (and their own, as a result) to impose their views on their subordinates.
nobody.really
Sep 22 2020 at 4:11pm
I’m seeing a lot of support for this explanation in the comments.
Famously, while Hilary Clinton won the majority of the votes of people earning below $30K/yr, and of people earning $30-50K/yr, this was because people of color are disproportionately represented in these classes. The WHITE working class voted for Trump.
Police, fire fighters, prosecutors, prison guards, and soldiers all skew white, male, and conservative–although their professions discourage conspicuous displays of partisanship. (Note, however, the Stars & Stripes poll showing that career soldiers favor Biden over Trump.) Physicians, bankers/finance people, and large firm lawyers also skew conservative.
I suspect truck drivers may follow a similar pattern, but I haven’t seen any data.
In short, perhaps Caplan travels in rather white-color, academic circles, and this may skew his perception of the political views among people in other circles.
nobody.really
Sep 22 2020 at 4:22pm
True, “keeping disfavored workers out of the public eye” may have a less pernicious effect than firing disfavored workers. But will competitive forces ever erode this accommodation to discrimination?
Sophronius
Sep 22 2020 at 4:35pm
Most obvious answer that springs to mind: HR departments are staffed by left-wing people. Most factory workers are right-wing. But the people who tell them how to behave are almost all left-wing. In fact, HR departments are frequently used to stuff “diversity hires”. Corporations are told they have to hire more women, but there are simply not enough women who want production line work. By contrast, there are plenty of feminists with social science degrees.
This creates a self-reinforcing loop: Companies are pressured to be more left wing, so they create departments full of socially left wing people who then pressure management to be more left wing… etc. etc.
Thomas Sewell
Sep 24 2020 at 6:13am
This is a big part of the explanation and what I came to the comments to also say. Some types of employees (like HR) are so dominated by left-wing academia graduates that it’s virtually impossible to find many who don’t automatically expect everything to be SJW compliant or even enforced.
We started a charter school. One of our explicit rules in the charter was to not spend school time on non-academic events. We thought we could avoid things like week-long Earth Day celebrations. This was in a heavily Republican area, so the parents were almost all on-board.
We found it almost impossible to meet the state’s teacher certification rules without hiring a bunch of extreme left-wing (for the area) teachers. That’s because pretty much all the teacher colleges are extremely left-wing. The teachers then proceeded to go ahead and routinely violate the rules against non-academic events and celebrations during school time because that was just the norm for them and they couldn’t imagine not doing it…
Miguel Madeira
Sep 24 2020 at 11:57am
This is not really an answer – it is simply the question formulated in different words (“The missing right-wing HR departments: a beckerian puzzle”).
Sophronius
Sep 24 2020 at 2:41pm
It certainly is an answer. If you keep reading you’ll see that my argument is that left-wing people are *intrinsically* more attracted to positions like HR than steel workers. A lot of HR people are women and so more likely to be feminist, but it’s also simply a matter of conservative vs. liberal attitudes. People with conservative genes are more likely to be doers, while liberals are more likely to be genetically intellectual. This then creates a self-reinforcing effect.
Honestly, a lot of these questions only seem mysterious because people refuse to consider genetic differences as an explanation.
ABV
Sep 22 2020 at 5:31pm
Having worked in the chemical processing industry and the oil and gas industry, most of my coworkers were conservative. The few people that were liberals had to handle it like you were Ohio St. fan living in Ann Arbor.
From the outside looking in some of these initiatives that look left are done for legal reasons. There seemed to be an understanding that things had to look a certain way so some government agency didn’t show up or a lawsuit didn’t arrive in the mail. Those types of things are expensive.
Similarly, my wife used to work in staffing. There was always the appearance of propriety. But, it was the staffing firms job to know that Company A would only hire an unmarried, attractive blonde woman under 25 years old. Company A would even have codewords to describe this worker, with a “you know what, I mean?” after each part of the description. And you better not send a minority candidate to Company B if you wanted to keep getting work from them.
Things are not always as they appear.
Mark Z
Sep 22 2020 at 5:52pm
Maybe monopolies/market power has to do with it. For example, I could see the mentality of a customer being: if business A is pro-X and business B is anti-X, I’ll shop at business B in order to create incentives toward the anti-X position. However, if business A has a monopoly, then the customer just accepts it and buys from them at the same prices he would if they were anti-X.
IOW, if customers are only able/willing to discriminate between businesses based on politics when there are more or less identical alternatives within that industry, then the more market power a firm has, the more its executives can get away with imposing their politics on the company. Maybe for customers, a company’s political identity isn’t really a cost imposed on the customer that effectively drives up the price and leads them to consume less from that company. Rather, customers engage in discrimination to impose (what they believe is) a good incentive structure on the industry. But if all the firms have the same politics (likely enough if there are only one or two firms), then customers can no longer discriminate between them, the incentive structure issue becomes moot, and there’s no cost to firms broadcasting their politics.
Dylan
Sep 22 2020 at 7:49pm
A question I have about the Beckerian model is, what if discrimination works in an earlier way to make one group statistically less productive than another group? Take a straightforward example, when hiring for a business to business sales position, it’s common to hire them for their “rolodex.” What’s going to make a sales person most productive is that they have pre-existing relationships with potential clients. Those relationships often come from where you went to school, who you grew up with, what internships you took on, etc… if there are groups of people that are systematically denied the opportunities to build those relationships, then even if everyone acts rationally in hiring, you’ll still get results that are biased.
Mark Z
Sep 23 2020 at 2:43am
Well in theory these situations would create profit incentives to, say, seek out new employees from the discriminated group and save money on them; or hire interns at a lower stipend from said group. If productivity is stifled in school, then there is a profit incentive for a for-profit school to provide better schooling, and/or for a bank to loan money to parents to send their kids to better schools to realize their economic potential and pay back the loans later. In the pure, frictionless, homo economicus model there’s always a capitalist who benefits from eliminating the discrimination. I think asymmetric information, lack of intergenerational altruism (regarding parent decision making), and regulations or norms (such as against banks loaning money to kids to go to good middle schools) are some of the main things that might impede that in practice. And transaction costs (the answer to every econ question).
Dylan
Sep 23 2020 at 9:32am
Thanks for the response. To a certain extent, I think you do see this. For profit colleges appear to cater more to minority students than traditional universities for instance. Results for these are questionable at best. It seems from a signaling model perspective, many students would be better off not going to college at all and doing something else with their time, rather than going to something like the University of Phoenix.
I guess what I’m trying to understand is, can there be a path dependence where at each step of the way, people are doing the rational thing, but you still get to a result that is highly biased based on where different people start out?
robc
Sep 23 2020 at 1:15pm
The answer is absolutely yes, due to transaction costs.
Without transaction costs, those effects would go away, but transaction costs mean that some of the means of evening out the differences are too expensive.
Mark Z
Sep 24 2020 at 12:05am
My suspicion is, in the very long run, within a society, the averages of groups of equal ‘natural’ ability will asymptotically converge. I don’t think statistical discrimination alone (well, plus groups starting out with different averages) would lead to a difference in means at equilibrium (saying nothing of course about how long convergence would take). I think this also assumes a well (or at least increasingly well) mixed population. If people persistently self-sort by group then things like peer effects may lead differences to persist indefinitely even with just statistical discrimination, imo.
Miguel Madeira
Sep 22 2020 at 8:04pm
At some time that I think that the “cancel culture” is a double victory for the left (specially the ant-racist, feminist, etc. left).
First, for the obvious reason – because, apparently, it is the left that is cancelling, and the it is right that is been canceled
But also for a more deep reason – the existence of “cancel culture” is, in itself, an evidence that the markets could be, conditioned by the social environment, systematically biased against some groups (in these case, the conservatives); and, after we accept that, the logical conclusion is that famous “female wage gap” or “white privilege” are indeed plausible.
Anders
Sep 24 2020 at 3:11am
I do not see it as a victory at all, at least in a historical perspective.
First of all, we forget that cancel culture has been the norm throughout history. It has only been a generation or two that we have had modest, broad freedom to speak out. This trajectory will continue, albeit in fits and starts.
Second of all, there is an intense, increasingly open debate about the issue, with some of the strongest criticism coming from the left itself. If Tucker Carlson rails against you (part of that growing group of partisans whose only true principle is to stick it to the left whenever possible), your leftist conviction will only grow stronger. If your own ranks speak out, you have a problem. As around half of the victims of cancel culture are on the left, this dynamic will continue.
Third of all, cancel culture, or at least the extreme cases we know of, is so patently ridiculous that there is little grounds for thinking reason will not prevail in the end, as it mostly, albeit belatedly, has.
So speak out, yes. Outrage and defeatism, no. We will be fine.
Idan Solon
Sep 22 2020 at 9:18pm
Respectfully,
I would like to hear examples of just what you mean regarding companies catering less to moderate and right-wing workers, and there aren’t really any offered in the article.
Here’s another explanation that may be unpopular with some followers but is nonetheless rather well-supported: The vast majority of highly intelligent people in the US orient toward the political left. https://www.sciencedirect.com/science/article/abs/pii/S0160289614001287
So, by catering to the left, elite (Facebook, Google) companies are catering to their best employees. This is why Big Tech is liberal–the intelligence of the employees.
Obviously, your explanations 2 and 3 also hold. The coasts are more liberal and so are academia and tech (for the same reasons).
You refer to “the media’s liberal bias.” But actually, the media is not liberal if weighted by viewership. People generally patronize media that are consistent with their own beliefs, so the media are representative of the public as a whole.
Also, depending on what you mean, the left is more likely to challenge the status quo, so leftist positions are more likely to require a “protest.” The right is just defending the status quo and does not require messaging that is as overtly political.
anonymous
Sep 23 2020 at 6:17pm
The only relevant passage I see in the article you cite:
robc
Sep 24 2020 at 8:04am
And that could be interpreted as “conservatives are smarter with money and more likely to go to state schools”.
Anders
Sep 24 2020 at 3:04am
The outrage around Damores internal google memo on gender comes to mind as an example here. It was perhaps a bit gauche (I would not do that in that context for simple reasons of self-preservation), but it was in no way a hateful screed. The signal, even to moderates on both sides, was clear: shut up or get out.
Kevin
Sep 30 2020 at 4:02am
Studies suggest that libertarians are smarter than leftists. https://reason.com/2014/06/13/are-conservatives-dumber-than-liberals/
Stephen M Jones
Sep 23 2020 at 3:00pm
So I don’t want to harp on this too hard, but my wife recently attended business school at a top tier university. The student affiliation breakdown from what I could tell was probably 30% solidly don’t care, 20% solidly red, 50% solidly blue. This would sorta match your previous work arguing that higher education correlates with greater liberalism. I’d note I met fewer extreme left wingers than average, with more tendency towards moderate democrats.
Now these are top MBA candidates who will be recruited to top firms and then tend to be the highly productive people at those firms. To the extent that they are the most productive and lean left then the firms as well would lean left. Organizing more conservative firms would then be one that excludes some of the most productive employees. The reason I don’t want to harp too hard is I’m not saying those on the left are smarter/more productive, just that among elite MBAs there is a left lean and I’d expect that lean to be replicated in the firms recruiting them because they want that talent. The marginal MBA might not be better than replacement but the average MBA almost certainly is.
Jonathan S
Sep 23 2020 at 3:12pm
How about social desirability bias in an urban (left-leaning) vs rural (right-leaning) context?
Most large businesses in cities seem to have a left-leaning political bias. Even in the South or Texas this is likely true.
Most large businesses in rural areas (agriculture, natural resource extraction) seem to have a right-leaning political bias. Even in California or the Pacific Northwest this seems to hold true. (A “rural” business’ headquarters may be in an urban area, however, which may alter this dynamic.)
Since there are many more urban businesses than rural businesses it seems reasonable that there would be many more left-leaning businesses.
Anders
Sep 24 2020 at 3:00am
It is not only that densely populated areas lean left (also, by the way, a reasonable explanation for the strong left-wing support of Corona-related restrictions), but that the right in urban areas tend to be, for lack of a better term, socially liberal; and that the left in rural areas tend to be more socially conservative than the party mainstream. Hard to imagine many a New York or OC conservative patronising, let alone celebrating, that iconic baker that refused to make gay wedding cakes…
Jameson Graber
Sep 23 2020 at 4:06pm
Maybe the most obvious explanation is that you’re not really talking about discrimination, are you? You’re simply talking about a left-wing corporate culture making people uncomfortable. It’s similar to discrimination only in the sense that many workers would be happier in a different environment, but they are not actually excluded unless they become confrontational. I think the vast majority of people, whatever their views, just want to get on with their lives and so avoid controversial topics if they can.
Anyway, given how long and how widespread many forms of ethnic discrimination were in the past, maybe you should just wait this out to see whether we won’t simply get over this phase we’re in. Market forces might be able to “work things out,” but they’ve never done so instantaneously.
Alexander
Sep 23 2020 at 6:07pm
Chick-Fil-A and Hobby Lobby spring to mind as two businesses that have been successfully optimizing themselves along these lines. But note that Hobby Lobby has had long, presumably expensive, court battles and Chick-Fil-A has had expensive setbacks due to governments giving in to the LGBTQ lobby.
A radically right-wing company would have hiring policies that are just plain illegal. (Conservative churches generally prohibit women from being employed as pastors, for example.) Normal conservatives are not like that, but they may be likely to hold views that could get them or their employers sued.
I suggest that a prominent factor is that the law leans left.
Jonathan S
Sep 24 2020 at 3:14pm
Regarding Chick-fil-a, I know quite a few people who work in various positions in the company (retail and corporate). While a more conservative corporate environment, you would still expect the “over the shoulder” look when discussing contentious conservative perspectives, such as pro-life or anti-gay marriage. I contrast this to my experience in the public sector and academia where I’ve never experienced an “over the shoulder” moment when a colleague would share their pro-choice or pro-LGBT perspective.
As far as I can tell, Chick-fil-a isn’t encouraging its employees to be conservative or opening their staff meetings in prayer. I’ve never heard of a Chick-fil-a employee fired for being pro-choice. Whereas I hear anecdotes out of center-left tech companies where breaking the progressive party-line leads to career ramifications (see: James Damore, who isn’t traditionally conservative as far as I can tell).
Jens Johannsen
Sep 23 2020 at 6:46pm
I definitely get the impression you have little experience working for actual companies. In my 25 year career in global and US based companies, most business to business, it’s clear to me that your summary of the political climate of American business is mostly wrong. My experience is that there is little advantage to becoming known within a company as having a political ax to grind, in either direction. Letting your political views interfere with your ability to work with people is a sure way to get yourself canned. My experience is that people can in fact express their political views in the right contexts, whether right or left wing, and disagreements can be aired but if someone was then going to be impolite about it, or try to make that into for that person who expressed their views, it would likely backfire on them.
There are a lot of profits to be lost by discriminating against anyone politically, as you would lose (or never hire) a lot of good people. Limiting yourself in advance to only half of the population is likely a sure way to just have a harder time recruiting.
Ben
Sep 23 2020 at 7:35pm
Suggest re-reading Taleb’s Skin in the Game. Chapter 2: The Most Intolerent Wins. Chapter 3: How to Legally Own Another Person.
These two chapters dont answer or address all of the concerns raised but do add additional inputs into the thought process
Ian Maitland
Sep 23 2020 at 10:33pm
Explanation # 5 gets support from a piece in today’s WSJ about how Wells Fargo CEO Charlie Scharf got his foot stuck in his mouth: “The unfortunate reality is that there is a very limited pool of Black talent to recruit from with this specific experience.”
He had trouble extricating it when the inevitable backlash struck him. But he duly ate his words (sort of).
“I apologize for making an insensitive comment reflecting my own unconscious bias,” Mr. Scharf said Wednesday. “There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise.”
Phil H
Sep 24 2020 at 12:30am
Hang on… The logic is all wrong here.
Becker’s argument says that firms which don’t discriminate have the best options for profitability. So the Becker model doesn’t imply that there should be firms that discriminate in a right wing way. It implies that there should be firms that don’t discriminate.
And indeed, there are many!
Your argument is confused and confounded by the fact that you’ve decided to label as “left wing” a set of policies designed precisely to avoid discrimination and thereby take advantage of the profit opportunity predicted by Becker, I.e. equal opportunities policies.
Anders
Sep 24 2020 at 2:56am
Systemic discrimination based on factors irrelevant to the job does indeed not appear to exist, even in otherwise openly racist societies. Historical data from apartheid South Africa, pre-war anti-semitic Europe, and pre-civil rights US show this clearly. My cousin had a company in South Africa in the 80s, a time where apartheid was sanctioned and enjoyed little support but for the notion that the alternative would be civil war, and had to jump through several additional hurdles to hire black office workers: hurdles put in place to stem the emergence of a large, black middle class.
That does not mean there is no problem – only that the problems lie elsewhere. Education system, cultural assumptions – you name it. That is also why responses targeting labour market discrimination, such as quotas, will only benefit the ones that have gotten far enough not to need help and entrench within-group inequality (apart, of course, from the corresponding discrimination of Jews and Asians in particular in the US context).
So how about learning from this and turning our attention to that astonishingly regressive US school system – an issue that has the added advantage of enjoying the support of both the likes of Chomsky and Friedman? In California, for instance, families have to pay a premium of up to 30% of already sky-high real estate prices to get access to a good school district (in addition, of course to the taxes funding it): it is hard to imagine a system more likely to entrench class and racial inequality than that.
Anders
Sep 24 2020 at 2:44am
We might be a bit at risk of missing the historical perspective, especially today with the antics of Trump and strange yet intense discussions on free speech, gender pronouns, and that bizarre, imaginary opposition between systemic racism and culture (both concepts that are important to understand what is going on with African Americans, but also vague and infused with tension to the point of not being useful at all).
I submit it is not as much simply saying you are a conservative that may lead to ostracisation in many circles, as openly celebrating Trump or opposing BLM wholesale. Those are different issues: in fact, from my perhaps a tad European perspective, there is not much that Trump does that is conservative in the traditional sense (respect for institutions, free markets and trade, family values, piety).
It is also a matter of age and intensity of beliefs. Young people sympathise by and large with progressivism – I studied in the US, and the Republican association had perhaps a dozen members. They even looked and felt the part: well groomed, mostly white, half of them studying economics. Many more, especially as their studies and life experience show the limits of their youthful idealism, may start to lean right later on, but these beliefs may be less fervent, also because they tend to retain the spirit, if not the letter, of their social justice ideals: here in Europe, while there is some awareness of the extremes of the movement, most (non-populist) conservatives would never outright condemn BLM.
For these reasons, we have a dynamic where sporting your conservative beliefs with any degree of intensity is associated with an extreme version of those beliefs that stand in real or imagined opposition to the social justice ideals that most of us actually hold. This reinforces itself with time, as more and more moderate conservatives speaking out start to realise ducking makes their lives much easier. In fact, I submit, internal opposition against extremes WITHIN the left has done much more to restore sanity than that from the right.
Just a thought – and not sure if and how this applies to the antics of Trump: an Economist cartoon of men in suits walking around looking scrunched like accordeons comes to mind (entitled Republicans have lost their spine or something like that).
Joe
Sep 24 2020 at 9:06am
In my experience (in the northeast corridor) I have felt that none of the political parties really represent the business community, and this started to blend even more as the economic consensus (even on the left) shifted more toward a free market POV (thanks Milton and Greenspan). Their main goal and motivation is to drive revenue growth (I want to sell my offer to as many customers as possible) while increasing productivity to reduce costs (I want to organize my production facial ties and hire the best managers possible). In a world where every human is a potential customer and a potential innovator or great manager the current GOP is embarrassing and hard to align to (thanks religious right and immigration hardliners). The current GOP is even hard to align to thanks to tariffs and trying to shift production. The left is awful on excess regulation where everything in a market failure and requires government intervention. The modern business has no political home (other than whose favor they can buy to advantage their firm)
Buck
Sep 24 2020 at 10:26am
(1) Ideological battles are expensive if your industry requires a high level of interpersonal collaboration to do work. If you see a rise in ideological battles outside of work, you should see attempts to reduce them at work. The way these battles are reduced is either by adopting a strong form of liberalism (neutral frame / no politics at work) or a strong form of uniformity. In my experience working in large coastal corporations you get both.
(2) Left and right are not equal. Just as statistically a man is taller than a woman statistically higher education people are more left than lower education in the U.S. today. If education is relevant to your hiring criteria then you will tend towards one side in your employee population leading to consensus (see 1).
(2.1) If high education is correlated with either higher productivity or higher leadership inside firms then any ideology correlated with education will win out when trying to settle on an internal consensus.
(3) Firms are more threatened by left political action than right. Right wing politicians when in power tend not to seek to constrain large firms, whereas left wing ones do. Each firm then is unequally incentivized to address the threat from the left versus the right. Issues around race, gender, etc. are low cost to firms, whereas leftist issues around workplace organizing, worker benefits, and worker power are very costly and are kept at a minimum.
(3.1) Politicians respond to donors and if you look at the people that are willing to donate to a party versus vote for them they skew wealthier (small dollar donors tend to be more educated, higher income than no dollar donors). If because of (2) the people who could be donors are more to the left then you will see more responsiveness between politicians and satisfied left employees.
Let’s think about the counterfactuals:
(1′) If ideological diversity was more valuable than consensus in high collaboration environments, I’d expect more efforts to encourage that. Early tech companies did this (see Google’s famously open culture). I would think this is more valuable when you are small and trying lots of different things to find a new hit. If you are large and have a big cash stream to defend you become more conservative about internal cultural diversity.
(2′) If right wing people are more educated than left wing in general or if education was negatively correlated with productivity I’d expect more right wing firms than left.
(3′) If right wing politicians were more threatening to firms than left wing, I would expect more responsiveness to their concerns. I’d note that as right wing politicians shift their rhetoric on big tech a lot of these firms hire token right wing people into leadership. I imagine if the right starts taxing them higher and breaking up large firms this behavior will increase.
grumpy_econ
Sep 24 2020 at 3:06pm
Dear Bryan, thank you for this stimulating article.
I am a former student of yours, and currently working in an undistinguished front-office position at a US tech unicorn (publicly traded). It is a typically “woke tech company”, so I hope my observations may be interesting to you.
My candidate explanation for the current equilibrium is to do with ideological differences between the sexes: women are more left-leaning and more sympathetic to all kinds of “intersectionality”-style appeals. In addition, they have much less to fear from woke dominance, because feminism is still by far the strongest intellectual current in the company, by virtue of numbers (ca. 50% women across the company, including absolutely crushing supermajorities in departments that dominate internal communication). A moderate woman who isn’t 100% on board with full-on critical race theory can still find meaning and community by talking about the patriarchy, girl power, #metoo, glass ceilings, etc.
So the people who might yearn for an employer with a different ideology will be predominantly men. But such an employer would then likely end up hiring mostly men. And men (straight or gay) really enjoy working around women. We may be silenced or feel intimidated, but at least there are some pretty faces at the lunch table, team events are much more fun, meetings more civilized (as other men mind their manners), etc.
So we stay.
Jose Pablo
Sep 25 2020 at 11:26am
A similar Beckerian argument could be used in the case of widespread pay discrimination against women.
The argument being that if this were the case (than women can perform at the same level for a fraction of the salary) then there is an opportunity in the many sectors in which personnel represents the main cost, to stablish a company that only hires women and could underprice the competition.
Since, as far as I know, this kind of companies does not exist and taking into account that most of the arguments you mentioned here do not work in this case, I think only two conclusions are possible:
a) The discrimination is not real: the differences in salaries do reflect a difference in performance.
b) The beckerian model does not work in the real world: there are barriers that limit the ability of the market to arbitrate away this “discrimination created opportunities”, even in the most “politically correct“ of the cases (I can imagine a widespread support, politically and in the press, for this kind of “hiring only women” companies”)
malcolmkass
Sep 25 2020 at 2:08pm
Well, no that is not correct, because it could be a preferences argument. But you much bigger flaw is that you are making a mistake that frictions somehow invalidate the theory. If I drop a bowling ball and a feather at the same time, the result does not undermine all of newton physics. Same case here.
Jose Pablo
Oct 2 2020 at 10:04am
Well, it does for all practical purposes. The right advice will be: “Don’t use the Newton result that the ball and the feather will drop with the same acceleration, for any practical use on Earth. Particularly if your own money is on the line (it is ok to do it with a grant from the government”).
Which is the preference argument, you mention? could you please elaborate on that?
Malcolm Scott
Sep 25 2020 at 4:03pm
You raise many good points. I would suggest developing your positions without the Right/Left paradigm which we know is flawed. Your points become crystal clear.
“Power and Control Groups” vs
“Personal Freedom Group” (I like to call them “Americans”)
To drive this home… why would Bush vote for Clinton? Kristol support Biden?
This explains why Billionaires support Socialists: there is money in it, as long as one is at the top of the structure.
Andrew
Sep 26 2020 at 7:16pm
I think it might be simpler than that, though your puzzle is interesting. I think many large firms have done extensive demographic and market research. This has led them to believe that over the long (and possibly short) term(s), there are more customers to be won by having a perceived progressive reputation. This doesn’t mean the firm is actually populated by flaming leftists. It just means that it’s leadership perceives a competitive advantage in publicly adhering to progressive ideology. Publicity and marketing that seek to position the firm on the left then have an empowering effect on its own left-leaning employees and a stifling effect on its right-leaning ones. This applies to your Apples and your Starbucks whom we will call generally capitalist insofar as they are concerned with profits and market share. Media, on the other hand, are what we could call true believers. They are less concerned with profit and market share. In fact, losing market share to Fox News has only vindicated their preconceptions as all of the viewers whom they disliked anyway have migrated away. Academia also falls into this category with two notable caveats: first, there are right-wing academics to be found who would make Tucker Carlson blush. But the second point is the more important for why the Academy evolved to be so far-left: they pick their own. You cannot become a Ph.D. simply by being smart. You cannot earn tenure just by being a good professor. You must be chosen. Ducks, in this case, tend to pick ducks. And so over time, the Academy has drifted leftward.
Anders
Sep 29 2020 at 3:35am
While we used to think of Republicans as the party of liberalism, free markets, and, bizarrely, big business, apparently this, with some exceptions, has reversed. The reason, I submit, lies on both sides. The Republican party has clearly strayed from liberalism – starting with the military interventionism, increase in government spending, and failure to reform looming liabilities like Social Security under Bush; and taken to what I hope is an extreme with the protectionism, isolationism, anti-immigration stance, (right-wing populist) identity politics, and disrespect for institutions and media under Trump.
The left, meanwhile, has clearly moved away from the emphasis on class and redistribution of FDR and LBJ – the Green New Deal, the extremes of which are by any logic politically not feasible, will be watered down with a hypocritical but nevertheless clearly pragmatist Biden at the helm. The focus is instead on social justice moralism – a moralism that gives companies an easy, straightforward way to do not only public relations, but make themselves attractive to talent (after all, the negative image of oil companies is a driving reason why petroleum engineers in the US have higher starting salaries than investment bankers). Coming across as a stuffy and conservative at best – and racist and sexist at worst – company is the last thing you want if you rely on attracting the right talent to keep things running.
So did Google executives actually read Damores memo and truly think it was a misogynist, rambling screed? Hard to imagine. Instead, they were merely reacting to incentives in the way that there shareholders would expect them to.
Too cynical? Then please disabuse me.
Shawn Eng
Sep 30 2020 at 11:13pm
Neoreactionaries describe the High-Low vs the Middle Alliance, where entrenched elites see a threat from the aspiring Middle and therefore weaponize the Low against them. This is why Hollywood millionaires proudly cheer on BLM terrorists who burn down mom-and-pop stores.
Medical professionals, the real estate rentier class and academics rely on rent-seeking to protect against various forms of competition and consumer arbitrage. The American Medical Association helped create the doctor shortage. Liberal NIMBYs reveal their true nature when rezoning threatens their school districts. Universities rely on the pipeline of middle and working class marks who think going into $100k into non-dischargeable debt for a degree in Grievance studies will turn them into a high-powered lawyer.
But all monopolies are eventually circumvented and collapse. So if your livelihood depends on make-work kludge, gatekeeping or licensing cartels, disintermediation is coming. It’s won’t be the end of the world. Just the end of you.
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