Wednesday, June 06, 2012

Big Business and Diversity

Paul Mero is in a tizzy today because several big companies are supporting gay-rights initiatives.

Over the weekend, I was drawn into a twitter dispute about Staples being a model for American business. I dislike the business model in which politically connected companies take out huge capital positions to dominate a market. I don't mind Staples, but I don't see it as the model I want for our economy.

During the dispute, I glanced through the Staples 2011 Financial Report. The report has a large section on the store's commitment to diversity. A major bullet point was "Joined the National Gay and Lesbian Chamber of Commerce (NGLCC) as a corporate member in support of its Supplier Diversity Initiative."

I have no problems with the NGLCC. Staples did the right thing by joining NGLCC.

Because Staples is a big firm seeking to dominate a market, it must do things to prove a commitment to diversity. This is what a company must to to dominate a diverse market.

The problem I see is that when we have an economy with just a few huge companies dominating whole market, those companies must fall into a given politically correct mold..

In contrast, when the market itself is diverse, then companies don't have to make politically correct pretenses about diversity.

The restaurant industry is a great example of a diverse market.

I've been to Mexican restaurant owned and run by Latinos. I've been to Brazilian Restaurants owned and run by Brazilians. I've been in Navajo Restaurants run by Native Americans, I've been to diners where the owners and employees were white. I've been to diners where the owner and staff were black. I have even been to a Chinese Restaurant where owners and employees were all Vietnamese.

I love the diversity of the restaurant industry and am not bothered at all that these restaurants are not, themselves, diverse.

I've noticed that there is a great diversity among Chambers of Commerce. CoCs often target geographic and demographic groups. I've noticed that CoCs for women are generally filled with women owned businesses, CoCs for Hispanics with Hispanic owned businesses, CoCs for Blacks tend to be filled with African American Businesses. I suspect that most of the business members of the NGLCC are Gay or Lesbian.

While small businesses rarely belong to more than one CoC. Big business join many CoCs in an effort to market to the businesses. This is especially true in the office supply market. Office supply firms should join every CoC in their market. It is good business.

A true free market will, by nature, be diverse. When the market is diverse it is okay for the businesses in the market to play up on ethnicity because the market itself is diverse.

Paul Mero's article makes the salient point: "To me, the most interesting aspect of these claims is how these political shenanigans in the name of healthy work environments and personal rights create a legal conclusion only resulting in redefining marriage."

A market full of small family owned businesses is likely to have a stronger support of traditional marriage.

In Utah, we have businesses owned by polygamist groups. I've worked with companies formed around non-traditional marriages. They ones I worked with were dysfunctional.

The fact that big companies trip over each other to show a commitment to diversity is the direct result of having a market driven by a desire of big players to dominate entire markets.

In conclusion, I am more upset that the Sutherland Institute (a group that takes money with false claims to supporting free market economics) is wasting its time on a culture war than I am upset with the fact that corporations play a charade of supporting diversity.

A truly free market will have a great diversity of businesses in it. Some of the businesses are apt to be owned by [gasp] gay or lesbians.

The difference is that the free market is a natural diversity and big business is a political and contrived diversity.

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