What Diversity can do, Design can do better.

People sometime argue that diversity in an organization is good because it improves the quality of ideas generated. Different backgrounds bring different perspectives, which provide different insights, whereas having many people with the same background causes partial redundancy.

This argument seems to be mainly made as a rationalization rather than as a true reason. It’s typically employed to support hiring more blacks, or less frequently more women and hispanics. But rarely do advocates explain exactly what new perspectives these people are meant to bring. Does one’s race give one a unique insight into how to write good code? If not, this argument seems pretty poor as a justification for discriminating in favor of blacks for programming jobs. Do women have special, vagina-based insights into maths or physics? If not, it doesn’t seem to work as a justification for discriminating in favor of women for STEM positions.

Indeed, if you actually wanted a diversity of opinions, you would probably just seek to hire that directly. Maybe your investment team should have majored in Economics, Physics, History and Statistics rather than Economics, Economics, Economics and Economics. Perhaps you should hire some social conservatives to your sociology department rather than actively and openly discriminating against them. Sometimes this strategy is employed – Corporate Boards do try to have people from a wide variety of backgrounds, both inside the company, different companies and even different industries. But I’ve never seen the pro-diversity crowd realize this purported benefit of racial diversity could be much more directly achieved.

Indeed, suppose different races did have different insights into programming. Then you would probably benefit from seeing each race represented. But while you might want some people from each race, there’s no reason to think you’d want them in the same fractions as appear in the overall population. At the moment having a racial breakdown significantly different from the US is enough to have you branded as un-diverse, but is there any reason to think the overall US has the optimal racial make-up for your company? Probably not. Indeed, as the racial make-up of the US is changing over time, even if your organization’s optimal make-up was fashionably diverse at the moment, it won’t be in the future, as the hispanic share increases and the white share decreases.

And if you were actually looking to take advantage of different racial perspectives and advantages, you wouldn’t have a corporate-wide quota or such. Instead, individual job openings would come with desired races attached. We would see a return to “No Blacks or Irish” notices on job postings, brought back at the auspices of political correctness.

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Laying down the Law

Recently Bill Barlow wrote an excellent piece in the Harvard Law Record, recommending law students go into corporate law so they could donate money to charity. Sima Atri wrote a response, to which Jeff Kaufman wrote a convincing rebuttal. I’m going to address one very small part of Atri’s article, which to be fair she probably didn’t put much thought into.

Because if you choose to go into Big Law and care about the poor and otherwise marginalized, giving your money to charity is the least you can do. I say this because you are not choosing to go into neutral, apolitical, work. None of us working in the legal profession are. Your firm, Bill, has represented JPMorgan Chase, a bank that backed thousands of predatory and racist loans and helped create the foreclosure crisis.

I think this attack on Bill’s firm is almost impressive in how mistaken it is. Specifically, I think
1) The banks were not at fault for what it did
2) What it did was not predatory
3) What it did was not racist
4) Even if 1,2,3) are all wrong, it’s still good to represent banks.
This is a lot to show, so lets begin.

1) The banks were not at fault.

Yes, banks lent to many poor people: subprime lending. But in part this was because the government forced them to make these loans, in an attempt to promote home-ownership. If anyone if to blame, it is the government, not the banks. Left to themselves, the banks would have preferred not to lend to such people, as they present higher risks. So it’s strange to blame the banks for this, who had little choice in the matter. The high default rates among minorities during the crisis was the result of government intervention, not the fault of the banks.

2) The banks were not predatory

Given 1), the worst we can really accuse the banks of is “only following orders” or being involuntarily predatory. But even this isn’t the case. Banks didn’t force anyone to borrow money. Having the opportunity to take out a loan is a benefit – it’s the reason we try to maintain good credit scores! As Arnold Kling noted, borrowers get a free option on rising house prices. Being given the option to borrow money is a good thing – you’re not taking advantage of people by giving them choices. (And stories about people not understanding that their repayments rates would rise don’t work, as the defaults frequently happened among people still paying the introductory rate.

Indeed, one part of the crisis was the so called ‘NINJA’ loans, where borrowers frequently defrauded the banks. It is hard to see how the banks can be taking advantage of people by being defrauded.

3) The banks were not racist

Indeed, JPMorgan Chase made many loans to minorities. As we noted in 1), left to their own devises, banks apparently made too few loans to minorities – they were accused of being racist for refusing to lend money. This was why the Community Reinvestment Act was passed. So it seems very strange to accuse them of being racist for making too many loans to minorities as well. Maybe it’s just impossible to win.

4) Even if 1,2,3) are all wrong, it’s still good to represent the banks.

Ok, so suppose 1),2) and 3) are all false; the banks are truly evil companies. Is it therefore bad to defend them in court? Well, the adversarial court system depends on their being lawyers available to defend the guilty. The ACLU often defends extremely unpopular causes, because it is in these cases that harmful precedents are most likely to be created. In the same way that anti-terrorist laws, originally aimed only at extremely dangerous and unpopular people are now being abused in much more mundane situations, so too will the extraordinary legal steps being used against the big banks one day be used against other targets.

I realize that this was just a small part of Atri’s article. But it’s worth commenting on anyway.