Do we really need to know who’s sleeping with whom at Goldman Sachs?
‘Welcome to Goldman Sachs. How do you like to have your genitals jostled?”
In a hilariously bedwetting report for ThinkProgress, Bryce Covert of The Nation laments the toothlessness of Securities and Exchange Commission rules regarding corporate reporting about “diversity” — whatever we imagine that word means — on the boards of publicly held companies. Ms. Covert, writing with all of the insight and originality that one expects from a writer describing herself as specializing in “women’s issues,” reports that corporations tend to be relatively lackadaisical if not actively uncooperative in the matter of calculating for federal regulators the fractional racial and sexual makeup of their boards, and only two firms account for board members by sexual orientation: Goldman Sachs and Bank of New York Mellon.
Leave it to a bank called BONY to make below-the-belt inquiries about its board members.
One wonders how those conversations go at a famously macho/overcompensating place such as Goldman Sachs.
Goldman: “Congratulations, we’re thinking about offering you a position on our board.”
Prospect: “Terrific. I look forward to giant wheelbarrows of money being sent my way.”
Goldman: “Yes, that’s the easy part. But first, I have an awkward question.”
Prospect: “Of course I can introduce you to my dealer.”
Goldman: “No, not that. Goodness. It’s just that I was noticing your haircut and your shoes, and I was getting a distinctly . . . well, a vibe, if you know what I mean.”
Prospect: “Betty at Bergdorf. She’s the absolute best.”
Goldman: “No. It’s just this: The SEC apparently is, as a matter of national interest, keenly concerned about what sort of sex our board members like to have, and we were hoping for something a little, uh, exotic to pad out the numbers. You know?”
Prospect: “I’m confused. I thought Goldman Sachs policy was to screw everybody.”
Goldman: “Welcome aboard.”
Unless the SEC starts listing “Blow a million bucks a year on cocaine and hookers” as a sexual orientation, the agency will never quite capture the truly subtle diversity of high finance.
As Ms. Covert notes, current SEC rules require only that companies report what it is that they are doing in pursuit of diversity on their boards. It does not require them to be doing anything; Warren Buffett’s Berkshire Hathaway, for example, sends the SEC an annual statement affirming that it is doing not one damned thing in the cause of diversity on its board. This worries Ms. Covert and others of her kidney, and she points approvingly to Norway’s quota system: 40 percent of board seats are reserved for women in Europe’s answer to Qatar, and punishments for non-compliance are absurdly severe — companies can be shut down for failing to meet the national sex quota. Norway acts as though the purpose of Tønsberg Widgets Worldwide were not the manufacture and sale of widgets but having a board of directors with a sexual composition that satisfies the whimsies of Norwegian politicians.
Those quotas have had approximately the results you would expect: A high premium has been placed on the relatively small pool of highly qualified women, referred to with exquisite Scandinavian taste as “golden skirts,” importing them when the domestic market fails to supply them. Those boards more in the market for silver or bronze skirts have in many cases simply done the expedient thing and created new non-executive board positions that exist for the sole purpose of being filled with women, leading to “younger and less experienced boards, increases in leverage and acquisitions, and deterioration in operating performance, consistent with less capable boards,” as University of Michigan corporate-governance scholars who studied the question put it in their 2011 paper.
The Left loves quotas, because the Left loves control. But what is really remarkable about the progressive attitude toward what Ms. Covert regards as an insalubrious excess of white men on corporate boards is the breathtakingly primitive concept of “diversity” on display. Intellectual diversity is good for corporate boards, and for many other kinds of organizations, because it is good for problem-solving, as decades’ worth of evidence attest. And it may be the case that in the context of the United States at large, ethnic and sexual diversity is a relatively useful proxy for diversity of background and experience, though that is not necessarily true in any individual instance. But to the point: Race and sex are by no means a useful proxy for intellectual diversity among the relatively small and highly self-selected group of people who are credible candidates for positions on the boards of directors of publicly traded companies. A black Harvard MBA from Kenilworth with 20 years at Morgan is much more like a white Penn MBA from Chevy Chase with 20 years at Citigroup than either is like a high-school graduate of any background from Muleshoe, Texas, with 20 years at Caterpillar. A corporate-management type who says things like “We need a tighter read on how paradigm changes in this space will impact our deliverables” is categorically useless without regard to race, religion, sex, creed, national origin, or bedroom shenanigans.
Strange thing: The Left practically sings hymns to the virtues of diversity, but everywhere that it finds itself in power — the schools, labor unions, foundations — it works ruthlessly to impose intellectual and political conformity on all who are subject to its influence. The same Left that thinks diversity is the key to good corporate management is populated by people who literally want to build prison camps for people with the wrong ideas about global warming. It’s almost as if all this talk about diversity is simply an excuse for putting business decisions under the discipline of federal bureaucrats, whose neutrality on the matter of partisan politics has been on such splendid display at the Internal Revenue Service and the State Department of late. If there’s another persuasive explanation for making a federal case out of who’s sleeping with whom at Goldman Sachs, I would love to hear it.
Why nationalize the means of production when you can just act like you own them?
— Kevin D. Williamson is roving correspondent for National Review.