Sunday, January 26, 2020

Goldman Sachs Goes Woke

We do not know how long Goldman Sachs is going to continue being a world class banking operation, but we do know that its new CEO David Solomon wants to lead the world in woke banking. 

We recall that Goldman bankers now have a choice of their own personal pronouns. Nothing like caving to the transgender lobby.

Imagine the scene, a Goldman banker arrives in Dubai and presents itself as: I am Biff and my pronouns are dem, dose, dese and duh. Or better, I am Buffy and my pronouns are: Bing, Bam, Bung, and Boo.

As though that were not enough, under the aegis of a Swedish truant it has now stopped financing fossil fuel projects. This has and will likely cause it to lose business in Alaska, among other places. 

If no other banks follow Goldman Sachs into the quicksand of identity politics that giant sucking sound will be business going to other banks.

Now, Goldman Sachs is striking a blow for diversity. The bank will refuse to manage the IPO of any company that does not have at least one woman or minority board member. This seems to be aimed at Silicon Valley high tech firms, firms that have always had a paucity of women and minorities. And yet, these are notably successful firms.

Unfortunately, the mini minds at Goldman Sachs do not seem to recognize that we should not mess with what works. To them, it's all about bigotry. Or, as the Bible did not quite say: bigotry, bigotry, all is bigotry.

CBS has the story:

Goldman Sachs CEO David Solomon has a plan to end the era of all-male, all-white corporate boards: The investment bank will refuse to take a company public unless it has at least one woman or non-white board member. The move could make a big difference with male-dominated startups, experts say.

Under Solomon's new rule, which goes into effect on July 1 in the U.S. and Europe, Goldman Sachs wouldn't have signed on as an underwriter for WeWork, which had a male-only board when it filed to go public last year. (Soon after, WeWork ended up pulling its IPO following investors questions about its financial losses and corporate governance.)

The push toward greater diversity comes as lawmakers and policy experts are questioning the lack of progress of women inside the boardroom and the C-suite. Even though women hold about 1 in 5 board seats in S&P 500 companies, the majority of businesses still have boards that are mostly composed of men, according to the MIT Sloan School of Management. 

Naturally, they have trotted out serious academic studies explaining that diversity is good for business. Thus, it must be true. CBS continues:

Academic research backs up the benefits of a diverse board, with studies showing such companies make better investment decisions and scale back on aggressive risk-taking.

Yet there remains a glaring lack of board diversity among venture-backed private business, which have provided the U.S. with some of the biggest IPOs in recent years.

About 60% of the most heavily venture-backed companies lack a single woman on the board, according to a study published last month from Crunchbase, Him For Her and Northwestern University's Kellogg School of Management. 

As it happens, in Norway, where diversity has taken over corporate boards, corporate profits have dropped by some 12%. Obviously, if the change was profit neutral or if it enhanced profit, we would not need the great philosophers who run Goldman Sachs or even woke politicians to enforce the rule. 

True enough, women are more risk averse. And yet, in some businesses, the failure to take risks and the raw cowardice that seeks safety and security are en impediment. If the great businesses of Silicon Valley grew and prospered without boardroom diversity, and without very much diversity at all, should we shut them all down in the interest of some foggy idea?

Anyway, if you were going to bet on a football game, would you choose the team whose members were chosen for their superior ability to play football or would you choose the team that was more diverse? 

In the future, I will make a modest proposal. In all future games in the National Football League, there must be gender equity, an equal number of males and females playing in the game on each and every down. I will bet you that you can find an academic study proving that this will not change the scores in any appreciable way. And now, Goldman Sachs can invest in football teams.

Anyway, The Wall Street Journal reports that the Goldman rule only applies in the woke Western world. When doing IPOs in Asia, the Middle East and even South America, Goldman will not impose the same rule.

It turns out that Goldman’s diversity drive doesn’t extend to its business in Asia, Latin America or the Middle East where all-male boards are more common. One third of corporate boards in China and Japan have all-male boards, as do 94% of those in Saudi Arabia. Goldman has been chasing business in emerging markets as it becomes harder to deliver growth in U.S. investment banking. Goldman says that it will consider extending the policy to other regions over time after consulting with clients, and as diversity awareness increases.

Perhaps Goldman doesn’t want to impose its values on non-Western cultures that aren’t as enlightened about identity politics. Or maybe it doesn’t want its wokeness to cost the bank global customers who care more about business than American politics.

One understands that we are all rooting for America in the clash of civilizations. We believe that our system is better than those of the Eastern world. But, you might ask, when one of America’s leading banks gets sucked into doing business according to diversity politics, how long do you think that that will last.

We have diversity. They have merit-based systems. If you were an objective outside observer, where would you place your bets?


David Foster said...

There is no legal requirement to use an investment bank when going public, and some believe that--independent of the GS issues--there is going to be a trend toward the direct listing approach. This approach was already used by Spotify and Slack.

Sam L. said...

I am in favor of letting Goldman Sachs to blow off it's/their feet up to the waistline with a 155mm howitzer, if that's what they want to do.

UbuMaccabee said...

Two systems for two nations: woke America and traditional America. Best off with a peaceful mutually agreeable divorce. As a single national entity, the United States is finished.

DocVinny said...

Actions have consequences.. And I don't think Goldman's new CEO has a clue. It's not going to be companies scrambling to put women on their boards, it's going to be promising startups going public with other banks or directly. The tail doesn't wag the dog.

Wonder how long they'll let him play woke CEO?

n.n said...

Binary sexes: male, female. Binary genders: masculine, feminine, respectively. And a transgender spectrum from homosexual to neosexual. Then there are the trans-social orientations that deny social standards established to normalize a favorable juxtaposition of the sexes.

Diversity (e.g. racism, sexism) denies individual dignity. It's a bigoted doctrine normalized under the Pro-Choice, selective, opportunistic, politically congruent ("=") religion. #HateLovesAbortion

Liberalism is divergent. Libertarianism is emergent. Progressivism is monotonic. Conservativism is moderating. #PrinciplesMatter

UbuMaccabee said...

Watching the titans of investment banking castrate themselves on an international stage must send a message to the rest of the investment world: there is a wounded whale in the water, and blood is everywhere. Dinner time.

trigger warning said...

Anybody who knows binary mathematics knows there are 10 sexes.

And a general caving in to "gender" as synonym for sex was Step 1:

Gender: "either of the two sexes (male and female), especially when considered with reference to social and cultural differences rather than biological ones..."
--- Oxford