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The article sets up a straw man and nicely destroys it: Not only did competition not end discrimination, there was enough discrimination that the act of not di

The article sets up a straw man and nicely destroys it: Not only did competition not end discrimination, there was enough discrimination that the act of not discriminating provided a significant competitive advantage for Townsend-Greenspan...But even that wasn’t enough to equalize wages between men and women... The absence of discrimination does not imply wages will be equal. It implies female wages will be equal to female marginal products. If female marginal product < male marginal product, then wages will be lower. Further, the existence of discrimination does suggest Greenspan-Townsend like firms arbing this irrationality will exist. Can anyone find such firms in the US? I can certainly find firms arbitraging other non-productivity based pay gaps, e.g. US vs Indian engineers.

RodericDay 11y ago
What's the strawman, exactly? You say, > Further, the existence of discrimination does suggest Greenspan-Townsend like firms arbing this irrationality will exist. The article counters statements like, > Marc Andreesen’s point is that the market is too competitive for discrimination to exist. With, > In the long run, that can put pressure on firms that discriminate, but as we’ve seen, that timescale can easily be longer than half a century. As the saying goes, in the long run, we are all dead. It seems like he's taking on a widely held position, even by yourself. Far from "a strawman".
- yummyfajitas 11y ago
  The strawman is that if discrimination did not exist, pay would be equal.
geofft 11y ago
It suggests those firms will be marginally more profitable if they exist; it does not suggest that they must necessarily exist. The author was able to give one example of a firm successfully being more profitable, and that because someone in a hiring role had a deep-seated belief that female marginal product was equal to male marginal product (or at least, not as much lower as female wages from male) and was willing to act immediately on that belief, regardless of industry best practice, regardless of waiting for any actual data on gender-based marginal product differences. (And startup profitability is so wild and noisy that, given that even generous estimates of the tech wage gap don't indicate orders of magnitude of difference, any individual startup that takes this strategy may have its resulting profit masked by a million other things. If you want to infer anything from the experience of such startups, you need a lot of startups.) Further, given current rhetoric about pay in the tech industry, it may be unconscionable (or if you wish to be cynical, "it may lead to sufficient bad PR that it will blow away any positive results") to focus recruiting on an undervalued group but also continue to underpay them. So there may not actually be an arbitrage opportunity; any employer that would want to recruit an undervalued group may feel compelled to not act on the arbitrage as far as possible.
- yummyfajitas 11y ago
  The author was able to give one example of a firm successfully being more profitable, and that because someone in a hiring role had a deep-seated belief that female marginal product was equal to male marginal product (or at least, not as much lower as female wages from male) That's not what Greenspan thought at all. Greenspan thought you can get a $100k economist for only $80k. That belief is completely orthogonal to the distribution of employee quality. I don't think Indian developers are "equal" to American developers - I think they are (on average) a lot worse. (The bottom of the Indian developer market is a lot lower than the bottom of the US market, and the top of the Indian market tends to migrate west.) I also think I can get a $150k data scientist for $70k if I look hard enough. Further, given current rhetoric about pay in the tech industry, it may be unconscionable (or if you wish to be cynical, "it may lead to sufficient bad PR that it will blow away any positive results") to focus recruiting on an undervalued group but also continue to underpay them. So there may not actually be an arbitrage opportunity; any employer that would want to recruit an undervalued group may feel compelled to not act on the arbitrage as far as possible Interesting hypothesis; social barriers created by social justice types actually cause inequality to persist.
  - geofft 11y ago
    > That's not what Greenspan thought at all. Greenspan thought you can get a $100k economist for only $80k. That belief is completely orthogonal to the distribution of employee quality. Hence "or at least, not as much lower as female wages from male". To expand on that unclear phrase: Greenspan thought that (output / market wages) for a female employee outpaced (output / market wages) for a male one; the scheme depended on those ratios, not on the raw values of output. But the important point is that he did so out of a personal confidence that the market was undervaluing women economists, not on any direct evidence. All available direct evidence, as evaluated by the market, claimed otherwise; that is why such a profitable arbitrage opportunity existed. Whether women's output and men's output are equal is beside the point of the anecdote. (I happen to think that he thought they were equal, but it is not relevant to the mathematics of the situation.) > Interesting hypothesis; social barriers created by social justice types actually cause inequality to persist. I'm not sure how you reach that hypothesis, primarily because there's no evidence that Greenspan's approach to hiring lessened inequality. In particular, the scheme only worked because women were being paid less money than men per unit output. I'm a little confused at the reading of this anecdote as "and then Greenspan realized that people were being sexist, and employed some women, and all was right in the world." In order to pay market wages for women economists, a market for those women at that wage needed to already exist; he admits that other places were hiring women for junior roles. He wasn't giving jobs to women when nobody else would; he was simply placing them in positions of more responsibility than other firms would, but paying the same wage. The beneficiary was not women, but his own employer's profits. My takeaway from the story is that markets can be so susceptible to human bias that even a valid, profitable arbitrage opportunity is rarely exploited, not that the existence of an arbitrage opportunity means the market will correct itself. (Also, at the end of the day, any firm profiting on any arbitrage has it in its own self-interest to avoid the rest of the market realizing that they're undervaluing a resource.... So, "social barriers" or no, the existence of an arbitrage opportunity has zero implication of a forthcoming fix to market-wide inequality.)

RodericDay 11y ago

What's the strawman, exactly? You say, > Further, the existence of discrimination does suggest Greenspan-Townsend like firms arbing this irrationality will exist. The article counters statements like, > Marc Andreesen’s point is that the market is too competitive for discrimination to exist. With, > In the long run, that can put pressure on firms that discriminate, but as we’ve seen, that timescale can easily be longer than half a century. As the saying goes, in the long run, we are all dead. It seems like he's taking on a widely held position, even by yourself. Far from "a strawman".

yummyfajitas 11y ago
The strawman is that if discrimination did not exist, pay would be equal.

geofft 11y ago

It suggests those firms will be marginally more profitable if they exist; it does not suggest that they must necessarily exist. The author was able to give one example of a firm successfully being more profitable, and that because someone in a hiring role had a deep-seated belief that female marginal product was equal to male marginal product (or at least, not as much lower as female wages from male) and was willing to act immediately on that belief, regardless of industry best practice, regardless of waiting for any actual data on gender-based marginal product differences. (And startup profitability is so wild and noisy that, given that even generous estimates of the tech wage gap don't indicate orders of magnitude of difference, any individual startup that takes this strategy may have its resulting profit masked by a million other things. If you want to infer anything from the experience of such startups, you need a lot of startups.) Further, given current rhetoric about pay in the tech industry, it may be unconscionable (or if you wish to be cynical, "it may lead to sufficient bad PR that it will blow away any positive results") to focus recruiting on an undervalued group but also continue to underpay them. So there may not actually be an arbitrage opportunity; any employer that would want to recruit an undervalued group may feel compelled to not act on the arbitrage as far as possible.

yummyfajitas 11y ago
The author was able to give one example of a firm successfully being more profitable, and that because someone in a hiring role had a deep-seated belief that female marginal product was equal to male marginal product (or at least, not as much lower as female wages from male) That's not what Greenspan thought at all. Greenspan thought you can get a $100k economist for only $80k. That belief is completely orthogonal to the distribution of employee quality. I don't think Indian developers are "equal" to American developers - I think they are (on average) a lot worse. (The bottom of the Indian developer market is a lot lower than the bottom of the US market, and the top of the Indian market tends to migrate west.) I also think I can get a $150k data scientist for $70k if I look hard enough. Further, given current rhetoric about pay in the tech industry, it may be unconscionable (or if you wish to be cynical, "it may lead to sufficient bad PR that it will blow away any positive results") to focus recruiting on an undervalued group but also continue to underpay them. So there may not actually be an arbitrage opportunity; any employer that would want to recruit an undervalued group may feel compelled to not act on the arbitrage as far as possible Interesting hypothesis; social barriers created by social justice types actually cause inequality to persist.
- geofft 11y ago
  > That's not what Greenspan thought at all. Greenspan thought you can get a $100k economist for only $80k. That belief is completely orthogonal to the distribution of employee quality. Hence "or at least, not as much lower as female wages from male". To expand on that unclear phrase: Greenspan thought that (output / market wages) for a female employee outpaced (output / market wages) for a male one; the scheme depended on those ratios, not on the raw values of output. But the important point is that he did so out of a personal confidence that the market was undervaluing women economists, not on any direct evidence. All available direct evidence, as evaluated by the market, claimed otherwise; that is why such a profitable arbitrage opportunity existed. Whether women's output and men's output are equal is beside the point of the anecdote. (I happen to think that he thought they were equal, but it is not relevant to the mathematics of the situation.) > Interesting hypothesis; social barriers created by social justice types actually cause inequality to persist. I'm not sure how you reach that hypothesis, primarily because there's no evidence that Greenspan's approach to hiring lessened inequality. In particular, the scheme only worked because women were being paid less money than men per unit output. I'm a little confused at the reading of this anecdote as "and then Greenspan realized that people were being sexist, and employed some women, and all was right in the world." In order to pay market wages for women economists, a market for those women at that wage needed to already exist; he admits that other places were hiring women for junior roles. He wasn't giving jobs to women when nobody else would; he was simply placing them in positions of more responsibility than other firms would, but paying the same wage. The beneficiary was not women, but his own employer's profits. My takeaway from the story is that markets can be so susceptible to human bias that even a valid, profitable arbitrage opportunity is rarely exploited, not that the existence of an arbitrage opportunity means the market will correct itself. (Also, at the end of the day, any firm profiting on any arbitrage has it in its own self-interest to avoid the rest of the market realizing that they're undervaluing a resource.... So, "social barriers" or no, the existence of an arbitrage opportunity has zero implication of a forthcoming fix to market-wide inequality.)