April 2009 – Andrew E. Scott

Division of labour

I’ve recently been doing a gender course at work. I don’t think it’s because I have been singled out as having gender issues. Perhaps it was just that when people were being nominated, my name was an easy one to say. (I don’t think Lleieusszuieusszesszes Willihiminizisteizzi Hurrizzissteizzi ever had that problem.)

After hearing all about someone else’s view of gender issues, it’s really solidified my own view. I hope I can explain it clearly here. Now, I haven’t experimentally verified this, but it is a testable hypothesis, and seems anecdotally true.

Of all the various personal characteristics, there are those that are directly related to reproduction, and all the rest. For those not related to reproduction (such as height, empathy, strength, ability to multi-task, focus, risk-taking — you get the idea) the characteristics are normally distributed for both genders. This is shown in the following diagram:

The difference between the genders is less than the difference within the genders

The diagram shows how for any particular (non reproduction-based) characteristic, the degree to which it appears in any gender is normally distributed across the population. The conclusion here is that the difference between the genders (as represented by the difference between the average degree of that characteristic for each gender) is less than the difference within a gender (as represented by the spread of degree of that characteristic within any particular gender).

So, treating people in the workplace (or, really any place) as if characteristics that they hold fall anywhere along the spectrum covered by both genders is a good way to ensure that you cover any particular gender well. Certainly, it’s a better approach than relying on characteristics to fall close to the average for a particular gender. In other words, and from the perspective of the male-dominated industry that I’m in, trying to accommodate both men and women is also a good way to ensure that you accommodate a broad spectrum of men.

Reality media

The first step, as they say, is admitting you have a problem. Okay. So, I like reality TV. Some reality TV, anyway. I enjoy the spectacle and the transformative journeys in The Biggest Loser and the level of talent and execution in So You Think You Can Dance. However, just as documentaries (e.g. Michael Moore’s Sicko, which I liked) aren’t “the truth”, reality TV is not reality.

I know this is obvious. But perhaps it is not quite obvious enough to those who should know better.

Let me use as an example the “singing sensation” of Susan Boyle, who appeared on the ITV show Britain’s Got Talent on 11th April. I was impressed when Bianca Ryan sung on America’s Got Talent, and this is also impressive in its own way.

I think she’s got a wonderful voice. Now, ask yourself this question – do you think it’s possible for a performer to end up on that stage without anyone in the production company knowing whether the performer can sing? Of course they knew she had a great voice. Note the line from one of the hosts mid-performance: “You’s didn’t expect that did you?” Clearly, the host expected it.

The selection of the performer, the performer’s make-up, the questions asked before the performance, the over-the-top reactions of the judges, the editing-in of selected audience reactions, and possibly even the song selected and the dress she wore are all likely to have been controlled by the production company. What we are witnessing is a manufactured reality, created to have us thinking the performer is a dreamer and then surprise us when they aren’t.

However, the media surrounding this TV performance appears to be treating it as “real” reality. One journalist quoted by the BBC, even describes the performance as a “reality check”. Are they participating in spreading the myth that this is reality? Or don’t they know any better? Such media stories might as well be labelled “reality media”.

Too-Big-To-Fail Considered Harmful

On 15th September 2008, the Lehman Brothers investment bank filed for bankruptcy protection. Their shares fell 90% that day, and the assets of the company were later scattered between Barclays and Nomura and some other smaller entities, according to Wikipedia’s article on the company. It had grown from its founding in 1850 to assets of US$639b, making it the biggest bankruptcy in US history.

That a company so big was allowed to fail shocked the financial services industry, and the global financial crisis shifted up a notch. Within a week, the two largest US investment banks (Goldman Sachs and Morgan Stanley) had turned themselves into banks with greater access to Federal Reserve funding. From what I can tell, no company that large was allowed to fail again during the global financial crisis.

There was talk that many such companies were “too big to fail”: that the repercussions to the economy and society if they failed would be so dire that governments would step in to save them. This is a troubling notion, and there is clear moral hazard where the sole reason to stop a company failing is that it is “too big”.

The principle of entrepreneurs taking on risky ventues, and being rewarded if they succeed, is a basic one in a capitalist society. However, if there is no chance of failure when a venture gains a certain size, then there is an incentive to create unsustainable growth until that size is reached, when rewards will be obtained at no risk. Or, to put it another way, the government of the day chooses to take all the risk for companies with the riskiest behaviour. This is clearly not something in either the economy’s or society’s interest.

Alternatively, if a large company was discovered to be following illegal business practices, under the rule of “too big to fail”, a regulator would not step in and take action against the company, because it would put the company at risk of failing. This isn’t a good idea either.

So, if propping up a big, failing company is a bad notion, what are the alternatives? Well, the obvious one is to let them fail. Obviously there are also the options of either making them smaller (e.g. split them up) or stop them getting big in the first place.

That said, big companies may be propped up if there are reasons for it other than their size. Letting all of Iceland’s major banks fail hasn’t done it any favours. Still, in Australia, if CBA, NAB, WBC or ANZ failed, I’m not sure what we’d do.