Discrimination

I'm reading the book "A Mind of It's Own" which primarily reviews a series of rather cruel psychology experiments.  One of them is bothering me, though.  In this experiment, men and women were recruited as volunteers.  The volunteers were told that they were going to be team leaders, and would receive financial rewards depending on how well their team performed on several tasks.  The team members, they were told, would also be paid based on team performance - and the amount of each person's reward would also depend on how highly placed they were on the team.  They were then emailed a pool of information about candidates for team positions - none of the candidates actually existed, but instead the descriptions were written by the experimenter.  They were told for each candidate academic strengths and weaknesses, and gender.  The woman in the experiment showed little sexism in choosing team members, but the men chose almost no women for high-level (and thus highly paid) positions.  However, oddly, the men tended to send emails to the women they didn't choose filled with compliments.  One particularly interesting comment was "Your answers were excellent...wonderfully informative...if you were on the team, you'd be absolutely fabulous, I'm sure of it...you're not on the team."  Men didn't send emails like this to men, and women didn't tend to send any. 

Now, there is a standard Austrian answer to sexual discrimination in the workplace - "If you have some sexist owner, he'll pass over qualified women, hurting his market share, and thus the market punishes him.  He either stops acting that way, or goes out of business."  Fine, but that only works if he knows what he's doing.  If instead he's exercising some kind of unconscious sexism, as the experiment suggests, and this is a widespread phenomenen, that response seems to break down.  For one thing, even if he is losing money, he isn't likely to attribute it to a tendency he isn't aware of.  That is, if he were blatantly sexist, he'd recognize the problem and fix it.  In this case, though, he isn't aware that he's passing up qualified women, and so won't stop.  On the other hand, maybe he won't even lose money, since his competition will be doing the same thing.  So is there some market solution for this kind of discrimination?

It's possible that a man thinks he will personally perform better if surrounded by other men, despite them having inferior qualifications.

There is no objective standard of what makes someone qualified or not. 

Stranger:

It's possible that a man thinks he will personally perform better if surrounded by other men, despite them having inferior qualifications.

That doesn't seem likely here - the volunteer is led to understand that he himself wouldn't be doing the work, just choosing the team members.  The team members would also work in isolation, so there shouldn't be any consideration for how well they'll work together.

Stranger:

There is no objective standard of what makes someone qualified or not. 

Perhaps not, but I'm still concerned about the building of a society where women cannot find high level work.  Not that I'd every suggest government intervention to fix it.

The truth is that men and women have inherently different characteristics; this is bound to give birth to some discrimination in one way or another.  Obviously, the market punishes those who discriminate by diminishing that entrepreneur's profits.  But the question should be what is the alternative?  The only alternative is to equalize pay by force; but at what point does this step over it's bounds; i.e., how is the government to know when they have compensated only the part of the pay that results from discrimination and not from different innate characeristics?  Clearly, there is no way to know this.  For the minute the government overcompensates, the men are being discriminated against; worse yet, the use of force is involved.  For this reason Libertarians oppose government intervention.  The world might not be fair to women (of course the market process will make it continually more fair), but the government can't make it more fair by force; any attempt at doing this is like groping around in the dark.

miksirhc:

The only alternative is to equalize pay by force;

That's what I hope to challenge - that is, I'd like to find another alternative.  Of course, what I'd really like is to find a way to explain that the market can, in fact, deal with the kind of problems I raised.  Or perhaps there is an anarcho-capitalist answer, some way that a private system can be developed that will tend to avoid this particular discrimination without the use of force. 

There are a lot of variables not accounted for here.

Mainly:

How qualified were the women compared to the men?

JAlanKatz:

That's what I hope to challenge - that is, I'd like to find another alternative.  Of course, what I'd really like is to find a way to explain that the market can, in fact, deal with the kind of problems I raised....

Have you read Block's brilliant analysis of the so-called pay gap between men and women? He makes a mighty persuasive argument that no real gap exists: the difference in average pay reflects lower productivity attributable to the institution of marriage. The Austrian argument is that discrimination in the work force can never survive in the long term precisely because under-paying workers creates potential profit for competitors.

On the broad topic of "discrimination," though, I think trying to force everyone to get into a group hug is a good recipe for violence. I don't love all cultures equally. For example, I'm not crazy about Islam in general or Arabs in particular--yet I firmly denounce their mass murder by US and "coalition" forces. I don't have to like someone to not murder him or genocide his entire ethnicity. I don't even have to like someone to live with him in peace and harmony. Trying to force me to like him will fail, and produce lots of anger as a side effect. Toleration is good enough, where "toleration" is synonymous with "non-initiation of aggression." The rest will have to sort itself out in the bowling alleys and barbecue pits everywhere.

--Len. 

"...For one thing, even if he is losing money, he isn't likely to attribute it to a tendency he isn't aware of.  That is, if he were blatantly sexist, he'd recognize the problem and fix it.  In this case, though, he isn't aware that he's passing up qualified women, and so won't stop.  On the other hand, maybe he won't even lose money, since his competition will be doing the same thing.  So is there some market solution for this kind of discrimination?"

The penalty 'imposed' by the market for discrimination is in direct proportion to favoring qualities other than job efficiency--so what difference does it make whether or not he (or others) is aware he is paying a self-imposed penalty? That is a market solution. Why isn't that sufficient?

Whether or not they are aware of it, I think the market discourages this since the tendency will always be to cut costs and strive to out-compete the competition by not engaging in this type of self-imposed inefficiency.

josh m:

The penalty 'imposed' by the market for discrimination is in direct proportion to favoring qualities other than job efficiency--so what difference does it make whether or not he (or others) is aware he is paying a self-imposed penalty? That is a market solution. Why isn't that sufficient?

I'd argue that it matters if he is aware because, if he is not aware, he can't do anything about it.  If he goes out of his way to reject qualified women, and then suffers a loss or sees less profits, he can say "ok, I should stop doing that."  If, on the other hand, he is unconsciously rejecting qualified women, and so are all other companies, first, he won't see the same loss, and second, when he does suffer a loss, he will blame it on something else, and so it will have no impact on him hiring women.  The exact tendency that you speak of, to cut costs and out-compete others, can only function if the owner is aware of what is causing him to have higher costs.  Now, the situation is actually a bit more interesting, because usually, the owner doesn't even do the hiring.  He has an employee doing it.  He can very strictly tell that employee "hire the most qualified, I don't care about race, sex, etc." and yet that employee might, while trying to follow directions, end up discriminating on sex, race, etc. 

Len Budney:

Have you read Block's brilliant analysis of the so-called pay gap between men and women? He makes a mighty persuasive argument that no real gap exists: the difference in average pay reflects lower productivity attributable to the institution of marriage. The Austrian argument is that discrimination in the work force can never survive in the long term precisely because under-paying workers creates potential profit for competitors.

Yes, I have.  I'm not sure the lack of a pay-gap answers the question, though.  The real question would be - is there a gap between women's marginal product and their pay that exists in any systematic, large-scale way?  But these empirics really don't answer the question anyway - if these tendencies are shown to exist in experiment after experiment, how can they not be affecting the workplace?  And, in fact, if they aren't, then that implies that there is a market process solution requiring more elaboration than the answer currently provided.  In that case, let's find it, it's another tool for arguing for a free market. 

I'm aware of the Austrian answer, but I don't think it addresses the issue of unconscious discrimination.  It only works if others notice it, and if the employer himself is acting consciously.

Len Budney:

On the broad topic of "discrimination," though, I think trying to force everyone to get into a group hug is a good recipe for violence. I don't love all cultures equally. For example, I'm not crazy about Islam in general or Arabs in particular--yet I firmly denounce their mass murder by US and "coalition" forces. I don't have to like someone to not murder him or genocide his entire ethnicity. I don't even have to like someone to live with him in peace and harmony. Trying to force me to like him will fail, and produce lots of anger as a side effect. Toleration is good enough, where "toleration" is synonymous with "non-initiation of aggression." The rest will have to sort itself out in the bowling alleys and barbecue pits everywhere.

I agree.  But I have concerns about a society where, for instance, unmarried women are permanently and systematically left behind in the job market.  Of course, if that's the way it is, that's the way it is - I'm against government intervention to do anything about it.  I do have a suspicion, though, that the market can handle it.

I'd argue that it matters if he is aware because, if he is not aware, he can't do anything about it.  If he goes out of his way to reject qualified women, and then suffers a loss or sees less profits, he can say "ok, I should stop doing that."  If, on the other hand, he is unconsciously rejecting qualified women, and so are all other companies, first, he won't see the same loss, and second, when he does suffer a loss, he will blame it on something else...

If he sees a loss but can't figure out why it's happening or what to do about it, then he'll end up out of business. It's OK if he suffers his karmic retribution without ever figuring out what he did wrong.

As for not realizing there's a problem, because "everyone's doing it," we need to remember that in a free market, good ideas are sticky. All it takes is one guy to do unusually well by tapping into the pool of talented, overlooked women, and the discovery will persist.

In government good ideas are non-stick, because an ignorant bigot can impose his will without fear of others out-competing him with their good ideas. If such a danger reared its head, the government would forcibly suppress it. That's why government is so indispensible to perpetuating, e.g., slavery, through things like fugitive slave laws.

--Len.

I have concerns about a society where, for instance, unmarried women are permanently and systematically left behind in the job market.  Of course, if that's the way it is, that's the way it is - I'm against government intervention to do anything about it.  I do have a suspicion, though, that the market can handle it.

Block argues precisely that "never married" women are not left behind: they're paid every bit as well as the males. It's the married ones who are "left behind"--but that's a result of the woman's choices, not discrimination. For example, leaving the workforce to raise children causes her to fall behind her never-married sisters by failing to keep up-to-date and sharp in her skills.

--Len. 

Len Budney:

As for not realizing there's a problem, because "everyone's doing it," we need to remember that in a free market, good ideas are sticky. All it takes is one guy to do unusually well by tapping into the pool of talented, overlooked women, and the discovery will persist.

Ah, I think you've pointed me in the right direction.  I think I will try looking at this in a Kirznerian way, taking your comment as my motivation.  Thanks.

scineram:

The market will never solve a non-problem.

Applause.