FIGURE 1
WELCOME TO THE SEMINAR ON RACISM AND SEXISM. (LAUGHTER). I’m not kidding. That is the title of the seminar, and it is an accurate one. It might sound funny but it is really very serious. This is because the critics of capitalism accuse the market of being in bed with or intimately connected to racism and sexism. They think that deep within the bowels of free-market economics is prejudice against blacks, women, homosexuals, whomever. This charge needs to be considered very carefully, to be dealt with, because it is very serious. In a sense, the entire free-enterprise edifice is at stake here.
Let us start off by just reviewing the economic concept of marginal revenue product. Sorry to have to bore you with such technical economic considerations, but they are crucial to understanding this issue. Marginal product is the change in total production when one more worker is hired. The marginal revenue product of the Xth worker is the total revenue product of X employees minus the total revenue product of X - 1 of them. Or, to put this in English, to arrive at the marginal revenue product of the 101st worker, you subtract the total revenue product of 100 workers from the total revenue product of 101 workers. What is left is the marginal contribution of the 101st employee.
Assume that a bunch of workers produced $10,000 in an hour. Then we hired one more, and the total revenue of the firm went up to $10,005. I attribute the change to the 101st worker and say that this additional $5 is the 101st worker’s marginal revenue product or productivity per hour.
Now, there are three possibilities with regard to wages and marginal revenue productivity on the market. One is that the wage will be higher than the marginal productivity, for example, it will be $7, while the productivity of the worker is $5. However, any company paying its workers more than it gets from them is going to go broke. The second option, if the firm pays its workers below what their productivity is, they will quit and look for other jobs where they can get more money. If, somehow, an employer succeeds in paying a worker $2 for a contribution of $5, some other employer will bid it up to $2.01 or $2.02 or $2.03 and eventually it will get up toward $5, so the third option is that employees will be paid according to their marginal revenue product.
So we economists, and this isn’t just Austrians but pretty much all economists except the Marxists (and I’m not sure they are really economists), adhere to the marginal revenue product theory of wage determination: wages are dependent upon productivity.
What, in turn, determines productivity? Well, how hard the employees work, how smart they are, how much training they have, how much capital equipment they can call upon. All of this, in turn, depends upon economic freedom. The more economic freedom, the more of all these things you’ll have, and hence the more productivity.
Okay, so much for a brief overview. Let me now introduce racism and I’ll focus most of the time on sexism or prejudice against females, but I want to first talk a little bit about racism.
There are two kinds of things that go under the general heading of racism. One of them consists of broad empirical generalizations that happen to be true. For example, Walter Williams, a very famous black economist, poses the following problem: Suppose you go to a place like Auburn University. I will give you $500 if you can find someone who can (1) dunk a basketball and (2) solve a quadratic equation. You can offer them $100 to perform these tasks. But you can’t ask them anything. All you can do is pick one person out of the masses of Auburn students. Walter Williams said, well, if you use broad empirical generalizations or induction, you’d be very wise to go to a black male and say “I’ll give you $100 if you can dunk a basketball.” On the other hand, you would be very wise to go to some sort of nerdy-looking, maybe Oriental, kid with a pocket protector and big glasses and say “I’ll give you $100 if you can solve the quadratic equation.”
But suppose you do it the other way around. That is, ask the geek to dunk, and the brother to solve the math problem. Walter Williams says that you’re probably not going to win the $500 reward, based on broad empirical generalizations. And indeed, there’s nothing wrong with saying this; it is true. It is just a matter of using common sense, or pre-judice, sometimes called prejudice. This just means pre-judging based on past history. It is eminently reasonable to bet that some black kid can dunk the basketball and some Oriental kid with thick glasses can solve the quadratic equation. If this be racism, well, so much the worse for me; it is just common sense applied to a sensitive issue.
Here is another example Walter Williams offers. Suppose you go into a room and you see a tiger sitting on a couch. What do you do? You have two courses of action. One, you could be prejudiced against tigers and close the door (laughter) and sort of hold the door there and call the cops or the animal control people. Or you can be unprejudiced, don’t pre-judge tigers, don’t profile this tiger on the basis of previous tiger behavior. Here, you go up to the tiger, and say “Hey, what’s happenin’ tiger?” (laughter) “How’s it shakin’?” and you try to give him a high-five. Or, you ask him “Are you vicious?” You are open-minded: just because every other tiger you’ve ever met will bite, you stay open to the possibility that maybe this tiger won’t. If this is racism (or species-ism), make the most of it. This sort of thinking is just behaving on the basis of empirical evidence.
Or, to get back to what I was talking about, the same applies to making the claim that blacks have a lower productivity than whites, on average. There are various theories as to why this should be. People on the left say, This is due to racism, or a vestige of slavery. In the view of Richard Herrnstein and Charles Murray, it is based on IQ.
But I am not interested in why this is the case. I am only interested in the conclusion: on average, blacks have lower productivity. That’s why they have lower wages, not because of prejudice and discrimination.
Consider the effects of the minimum wage law, which rises in a stepwise function, on the unemployment rates of white and non-white teenagers. As you can see in Figure 1, the latter is very much higher than the former. And the question is “Why should this be?” The reason is that if you have a minimum wage above productivity levels, you’ll have unemployment.
If a person has a $5 an hour productivity level and the minimum wage is $7 an hour, you lose $2 an hour if you hire such a person. There is a higher unemployment rate for blacks than whites because white kids have a higher productivity level than black kids.
Now consider real racism, or real preferences. Again Walter Williams: “When I decided to get married, I immediately eliminated half the human race as a possible marriage partner.” He was heterosexual so he didn’t want to marry any man (laughter), so immediately he reduced his candidates by half. Three billion members of the human race would not even be considered. What a horrible person he is. A racist, he wanted to marry a black girl, so he engaged in his preference for black women, and he immediately put to the side all white women and oriental women and all other women. Here, he was engaging in racial pre-judice, namely, selecting a mate on this basis.
Of course, he has other preferences besides sex and race, namely, he wanted an attractive woman who had a sense of humor, who was bright. So the man is not only a racist and a sexist but a lookist and a smartist; he is really a bad guy. We ought to put him in jail. Of course, I’m kidding.
Most people, when they think of racial prejudice, picture hanging black people. Now, that is obviously a different kind of racism than making an empirical generalization on one hand or engaging in preferences on the other. Using violence on racial minorities is so different than those two things that we really need a different language to distinguish coercive racism from the non-coercive variety.
In nature, the skunk is a very weak animal, and if it didn’t have its special smell, it would probably go extinct. Similarly, the porcupine, if it didn’t have its quills—think of two porcupines mating, they’re gonna be very careful as to how they get together—but if it weren’t for those quills, the porcupine would also go extinct. Similarly, the deer is a very weak animal except that it is fleet of foot. Each of these members of the animal kingdom has some sort of compensating differential it can use to overcome what would otherwise be considered a very serious weakness.
So is it in economics. This applies to racial prejudice of the preference type, to the employer who doesn’t want to hire blacks. He isn’t hanging them, he is only engaging in a certain taste: he prefers whites to blacks as his employees.
Well, blacks have a compensating differential just like the skunk, porcupine, and deer. And what is it? The ability to work for lower wages. Assume that at least some employers were racist and wanted to indulge their preference against blacks. This would imply a lower wage for this group, below what their marginal revenue productivity would otherwise imply.
But this means that if you hired a black, you would make more profits on him than if you hired a white, because the wage of the former was driven down for reasons having nothing to do with productivity—do you get it? do you see the compensating differential at work?—and then you would be able to drive out of business your competitors who were prejudiced against blacks. This is why I say that, under free enterprise, you don’t tend to have any racial preferences being indulged in because they continually get driven out of the market. Those who engage in it, whether against women or blacks, it doesn’t matter, pay more for workers than those who only are prejudiced in favor of green, as in money. Why, then, are black wages below those of whites? Because their productivity is lower. What in turn, accounts for this? A full exploration here would take us too far afield. Suffice it to say that there are two main theories. First, vestiges of slavery and Jim Crow legislation. Second, lower IQs.
If you have a white and a black kid and they have equal productivity, and the wage of the black is $3 an hour and the wage of the white is $4 an hour, if you hire only whites you pay your labor force $4 an hour, your competitor pays only $3 an hour, he’ll be able to underprice you and drive you out of the market. As a result, racial or sexual or any kind of discrimination does not long endure under a regime of economic freedom.
So far, I am only talking about discrimination on the part of employers. There are three sorts of racial or sexual discrimination that are possible in the labor market. One is on the part of the employer, and I hope I’ve convinced you that any incipient tendency for employer discrimination will vanish unless there is a minimum wage law, or something of the sort.
Why? If there is a minimum wage law, then you have discrimination on the cheap. Then there are no penalties. In other words, if you have to pay more than a certain amount, what you do is you take away the smell of the skunk or the quills of the porcupine or the fleetness of the deer or the ability of black teenagers to work for a lower wage, then it doesn’t work. So it is only on the free enterprise system that discrimination of this sort tends to be eradicated.
Okay, so much for employer discrimination. Employee discrimination occurs when one group of employees hates the other group of employees, say, whites and Orientals revile each other, or blacks and whites, or Orientals and blacks, whatever. The result in this case is not unemployment or wage differentials; rather, it is segregation in the labor force.
For example, I’m an employer, and I have whites and Orientals on my staff who hate each other; when they get near each other they fight, which reduces their productivity. What I do is I keep them separate. Let’s say I’m building houses, so in this development, the one group builds the houses in this section and the other builds houses far away from them. If I have a factory, I keep them in separate parts of it.
The third type is customer discrimination. That is where this idea of Walter Williams being the customer and trying to find a wife in the marriage market comes in. That is harder to dissipate; it can last longer in that there are no strong market sanctions in operation, in contrast to the employer case. However, even here, there are penalties: consumers with a taste for discrimination will have to pay more than those who are color blind. In the market, you might have different groups of people being voluntarily segregated from one another.
Minorities need not fear the market. There are sources that will come to their rescue as long as you don’t have things like minimum wage laws to interfere with this process.
Okay, that is all I’m going to say about racism. Let me now talk a little bit about sexism. Here, I am going to deal with two issues. One, is there a male-female wage gap attributed to prejudice against women and capitalists being evil? And then also, second, I’ll talk about the glass ceiling. Why is it that there are so few women in top CEO positions or top politicians or leading scholars in physics or math? The latter is the issue over which Larry Summers, the president of Harvard, got in trouble for daring to discuss. I’ll be more than merely discussing this.
Here are some cartoons that illustrate the left-feminist, view on discrimination. (Laughter). The first shows a boy baby and a girl baby. They are looking into their diapers, and the caption says “Oh … that explains the difference in our salaries!” This is a socialist feminist cartoon indicating that the reason females are paid less is that the market or employers hate women or deprecate their contributions or diminish them.
This is puzzling because the idea is that most employers are white and male, and somehow they hate females. I mean, the males I know don’t hate females. (Laughter). If anything, the very opposite is the case.
Here is another cartoon in this genre. A businessman who has obviously had a bad day is having a beer, and he says to the bartender, “I feel like a man trapped in a woman’s salary.” The idea here is that there is something endemic in markets that lowers female wages and this guy just is getting in touch with his feminist side.
There are two theories as to why females earn less than males. Before I get into them, let me start off by agreeing with the claim that, indeed, females do make less than males on the market. I do not at all deny that.
The mainstream economic analysis of this situation can be depicted in the supply and demand curves of Figure 2. Whether for whites vis-à-vis blacks (left panel), or women vs. men (right panel), in each case there is an original supply and demand curve for labor. Then, we introduced racial (or sexual) discrimination against both supposedly downtrodden groups. When we do, the demand curve for labor in each case, originally based upon marginal revenue product, or productivity for short, now incorporates, also, discrimination, and shifts to the left.
Since employers are discriminating against black laborers, their wages fall, and fewer of them are hired. It is the same things for males and females. The demand curve based on non-discrimination or marginal revenue product is only a first approximation. You then add discrimination to the mix to explain why blacks and females get less money than their white and male counterparts.
Let me offer some quotes in support of this mainstream contention. Here’s a quote from a feminist: “Jobs held by women are valued less than those held by men, which accounts for the wage gap.” A typical sort of claim. And then, they will give you all sorts of statistics to buttress this: “Women with a university degree earn just $1600 a year more than men with a high school education.” “Working women who graduated from a university earn just $4,000 more than men with less than grade 9 schooling.” These statistics go on and on, explaining that female contributions to the economy are valued less than male contributions.
As I said, I agree that women do earn less than men. Looking at data from the statistical abstract in the 1980s and early 1990s, median weekly earnings for full-time workers, female wages as a percentage of males starts in the 60 percent level and then it gets up to about 75 percent. For the black-white comparison, it’s about the same, only it’s more stable, staying around 75 percent, 78 percent.
There is a wage gap of some 25 percent, depending upon the year and depending upon whatever else you hold constant. The shift in the demand curve is the theoretical way to explain it and the statistics do bear it out that women earn less than men and blacks earn less than whites.
According to the mainstream, the explanation is racial or sexual discrimination. The other theory, the one that I espouse, is that rather, differences in marginal revenue product account for the earnings gaps. Remember, we started off the hour by saying that marginal revenue product is what determines wage rates. So, if blacks have lower productivity than whites, or if females have lower productivity than males, well, that would account for the wage gap without any discrimination needed.
I want to now offer you reasons for thinking that females on average have lower productivities than men. Why is it? Are women inferior?
Well, in the 19th century, they probably were inferior in terms of productivity, because men are stronger than women, have more upper body strength, stronger legs, and when a lot of jobs were in the mines and in the factories and cutting down trees and pushing horses around, it doesn’t take any great leap of insight to think that men would be more productive. After all, and this is not contentious, men are bigger and stronger and meaner and they can push horses and cows and trees around better than women can, and men can dig with shovels more effectively.
So in the 19th century, we would expect, even without any discrimination, for there to be some wage gap indicated by the productivity differential. But now in the 21st century, where most of these jobs are done by a button or a lever or from the cab of a truck or a combine, and many, many more jobs are brain jobs and not brawn jobs, the productivity differential would just about disappear. I would expect that, on average, men and women would be equally productive, and, thus, that in a full free-market system, their wages would be equal.
How, then, do I explain this wage gap that persists even to the 20th and 21st century? I entirely reject that supply and demand analysis. Or, rather, I see it as the barest of starting points of the analysis, not the completion. Let me explain by picking on a student, as is my wont. What’s your name?
[Student]: Jay
Jay. Suppose Jay and I have the same time for the quarter mile. We can each run it in 52 seconds. That is pretty good time for high school runners; well, at least it was when I was in high school. It is not a good time for the Olympics. You have to go in about 45 seconds to be competitive there.
So Jay and I line up at the starting gate, and just as the gun is ready to go off, I put a 50-pound sack on his back. Who is going to win the race, given that we are otherwise evenly matched? I am going to kill him! Right? Because I’ll run the distance in my usual 52 seconds and he’ll chug around with a 50-pound sack on his back. If he can finish in under 5 minutes, he is doing pretty well.
My claim is that most women have, in effect, a 50-pound sack on their back, and that is why, on average, their productivity is lower than that of men. And what does this 50-pound sack consist of? It consists of marriage. This is the “Marriage Asymmetry Hypothesis”—the assertion that marriage enhances male productivity in the market and reduces female productivity.
Now let me take a little survey. If you’re married, answer me on the basis of your own marriage. If you’re not married, respond on the basis of the marriage with which you’re most familiar, probably your parents’ marriage.
Here are three choices with regard to housework, child rearing, doing errands, shopping, gardening, getting up in the middle of the night to take care of the kids, cooking, cleaning, doing laundry, doing the dishes, all those tasks.
The first choice is that this is done equally between husband and wife. Raise your hands. How many say that that is true of the marriage that they’re now thinking about? I’ve got one liar there, two, three liars. (Laughter).
How many say that the husband does more than the wife? Zero.
And how many say that the wife does more than the husband? Obviously. (Almost the entire group raises their hands). Truth-tellers here. (Laughter). And these two are married and they are still lying through their teeth. (Laughter) I know why he’s raising his hand (Laughter). He doesn’t want to get in trouble with his wife.
You don’t have kids yet?
[Student]: No, we don’t.
Just wait. (Laughter). Just wait and see who gets up at 3 in the morning, when the baby cries. I’m not talking about just breast feeding which obviously only one of you can do. I’m talking about everything else involved in child rearing.
When my wife and I had our first kid, she hardly let me near the baby! The same with the second one. I mean, her instinctual attachment or attraction to the baby was amazing. I love my kids, I hugged them and kissed them all the time, well, at least when they were a bit younger. But her attachment to our children was vastly superior to mine. My wife practically shunted me aside when it came to bringing up our children.
I am making a point about opportunity cost. This is a basic element of Austrian economics. It should be of all economics, but the neoclassicals only pay lip service to this concept. But opportunity or alternative costs is a basic element of Austrian economics. If you want to be a concert violinist, what do you have to do? You have to practice all day. You know that joke: “How do you get to Carnegie Hall? Practice.” (Laughter.)
(In response to a puzzled student’s facial expression:) Look, if I have to explain the joke we’re in trouble. (Laughter.)
Well, if you want to give concerts, you are going to have to practice the violin, 6, 8, 10 hours a day. But if you do so, are you going to be a good heart surgeon? No, because a heart surgeon, too, has to take care of business for many hours of the day.
There are opportunity costs. If you have your heart and mind and soul on the home, and child rearing, if you are doing a vastly disproportionate amount of home work, well then it should be no accident that your productivity in the market, which is a very different thing, should be lower. It’s as if you have the 50-pound sack on your back during the race. Of course you’ll have lower productivity.
Here’s another joke. The husband and the wife are both chemists; they both work in the pharmacy, pharmaceutical company, lab, whatever, all day. They come home at night together at 8 o’clock. What does the husband say to the wife? “What’s for dinner?” This occurs because he is not as good a cook as she is for various cultural, or rather biological, reasons, but we’ll get to that in a bit.
Another story. The husband and wife both have a job in Auburn, and one of them gets a great job offer in San Francisco; the other will just have to take what he or she can get when they both arrive. Under what conditions are they more likely to move? To enhance the husband’s income or the wife’s income? Obviously, the husband’s income. This is because the couple acts as if they’re a profit-maximizing or wage-maximizing firm. If they expect to have say, three babies, each three years apart, starting in three years, by the time the youngest one is in kindergarten and the wife can then go back into full-time work, 15 years will have passed.. So isn’t it silly to move where the wife gets a job and the husband has to take whatever he can get: drive a cab or be a waiter? Do you get the point?
So the couple is acting, even if they have equal abilities, and even if they have equal attachment to the home, so as to maximize his income. Is it any wonder that his income and productivity is higher than hers? That is the marital asymmetry explanation.
Here’s a quote with regard to housework, about two sociologists (from Newsweek):
To their surprise, the sociologists discovered that the social and economic gains won by so many American women during the past decade have had remarkably little impact on the traditional gender roles assumed by the more than 3600 married couples in their study. Although 60% of the wives had jobs, only about 30% of the husbands believed that both spouses should work, and only 39% of the wives thought so. No matter how large their paycheck, the working wives were still almost entirely responsible for the couple’s housework. Husbands so hated housework, the researchers found, that wives who asked them to help out could sometimes sour the marriage.
We just took an informal survey here. It showed that the overwhelming number of people, based on the marriage with which they are most familiar, the wife does the lion’s share of the housework. The husband hardly does anything.
I have two sets of proofs for this contention, namely, that it is the marital asymmetry hypothesis and differential productivity of husbands and wives that accounts for the pay gap and not prejudice on the part of employers. The first set of proofs is logical. The second set is empirical.
First, let us consider the logic of the matter as shown in Figure 3. What the left-wing feminists are asking us to believe is that the productivity of male and female is the same, and I’m assuming that the productivity is $10 an hour, and that the wage of the male is $10 and the wage of the female is $7.50 which would give roughly the 25 percent wage gap that we’re talking about.
| Male | Female | |
| Wage | $10 | $7.50 |
| Productivity | $10 | $10 |
Profit = Productivity - Wage
Male: 10 -10 = 0
Female: 10 - 7.50 = 2.50
They are asking you to believe that this is an equilibrium situation. Let us do a profit analysis on this hypothetical data. Now suppose you are an employer, and as you know, the profit earned off of workers is based on their productivity minus the wage you pay them. It is clear that the profit earned by your firm from the male is $10 productivity minus $10 wage or zero, which is fine; in equilibrium there are no profits. But what is the profit from the female? Well, the woman is equally productive at $10 an hour and you are paying her $7.50, so you, as her employer, make $2.50 an hour off of her. It is as if she has a little sign on her lapel, saying, “If you hire me, you make an extra $2.50 over and above what you could by hiring a man.” You see the point? This could never ever last.
A foolish “sexist pig” might say, “No, no, no, women belong barefoot, pregnant, in the kitchen, I am never going to hire one, ever, because they are evil, or inferior, or whatever. I’m only hiring men. And I’m paying them $10-an-hour.” Remember, in our example, the women are just as good as the men, in terms of productivity, but you can have them for a mere $7.50. Well, you make an extra $2.50 off of each one of them. You’ll be able to underbid the counterpart, male, chauvinist pig employer and drive him out of business.
Another implication of this is that in industries that are even nowadays mainly dominated by men, forestry, mining, cement works, they would make less profit than in industries where they could exploit women, such as secretaries or librarians or teachers. But we know that profits in all industries have to be the same (abstracting from risk). Otherwise, there would be a movement of investment money to bring them toward equality. If the profits in copper are higher than in steel, people will get into copper lowering the profits there and get out of steel raising those profits until there is some sort of equilibrium at least approached; at least, there is a continuing, ongoing tendency in this direction.
So this story is just nonsense on stilts. It is just plain crazy. It’s lunacy. It’s illogical. Who is that guy with the pointy ears? In Star Trek? Yes, Spock! Thanks. He’d say “This is illogical.” This can’t be.
The do-gooders say, “Let’s have a legal minimum wage for men and women.” This is called equal pay for equal work. If we did that, then we would pay men and women $10. In this case assume the male productivity is also $10, but now, the female productivity is realistically $7.50, as shown in Figure 4.
| Male | Female | |
| Min. Wage | $10 | $10 |
| Productivity | $10 | $7.50 |
Again, this is not because women are inferior, but because they have something else on their minds, they have a 50-pound sack on their back when it comes to working in the market. There is no biological inferiority, certainly not in the 20th or the 21st centuries, although there might have been one in the 18th or 19th centuries because of this upper-body-strength business. But if you do the profit analysis, the firm will now lose money on women if you have to pay them $10 and they are only worth $7.50. Then adult women will be unemployed, the fate now suffered by teenagers.
Regarding equal-pay-for-equal-work legislation, you already get equal pay for equal work in the market. It doesn’t seem that this is the case, since females earn less than males, and are supposedly equally productive. But they are not. Women who would otherwise have equal productivity with men, instead have less, because of their intensive home and baby interests. If you demand that the two genders be paid the same amount even though females are worth less on the market, they will become unemployed. Then, firms will lose money if they hire a woman (at a wage higher than her real productivity level). Right now, the male and female unemployment rates are about the same. But if this stupid and evil law were enacted, that would no longer hold.
So much for the pure logic of the matter.
Now for the empirical side. Remember, what I just said is that marriage enhances male incomes and lowers female incomes.
Well, what about people that have never been married? Not widowed people who have been touched by the institution of marriage, not divorced people, not separated people who have also been touched by the institution of marriage, but people who have never been married. At all. Not widowed, not separated, not divorced, not nothing. Just never married. The implication of what I’m saying is that here, the wage gap should be zero. Right? Because I’m tying this whole thing on marriage, so therefore, if we abstract from marriage, and there are people that have never been married, the wage gap ought to go away. Entirely.
Let us look at the statistics in Table 1. Female-to-male earnings in percentage terms. Total (all people, whether ever married or not): 37 percent. Ever married: 33 percent. Never married: 99 percent.1
| TABLE 1 | FEMALE/MALE EARNINGS IN % TERMS |
| Ever | Never | ||
| Total | Married | Married | |
| Canada 1971, aged 30+ | 37.4 | 33.2 | 99.2 |
| Canada 1971, university degree | 61.2 | 56.8 | 109.8 |
| Canada 1982, HS diploma | 67.4 | 63.8 | 93.4 |
| All | 25+ | 16–24 | |
| U.S. 1983, all workers | 76.8 | 74.4 | 94.8 |
Just look at the top line here. This is a smoking gun for the marital asymmetry hypothesis. It says that men and women who have never been married earn about the same amount of money. I got these statistics when I was working at the Fraser Institute in Canada. Statistics Canada, which is the equivalent of the Bureau of Labor Statistics in the U.S., didn’t even calculate this material. We had to pay them tens of thousands of dollars to make a special calculation for us. And when they saw that, they didn’t believe it and they didn’t like it, but they gave it to us because we had paid them for it.
This is proof positive, if you believe in empirical proofs. I don’t, I don’t trust their statistics any more than I can throw them; I rely more on what I said was the logic of it, but it is nice to have the empirical evidence illustrate the point. Not prove it, but illustrate it.
You see, the prejudice or discriminatory hypothesis doesn’t make sense. It is dead from the neck up. Here I am, I’m a male chauvinist pig, I hate all women, I want to deprecate them, I don’t distinguish between married and unmarried women, between widowed, separated, and divorced women, they’re all women, and to hell with them! Right? That’s my attitude! Well then why am I discriminating against ever-married women and not never-married women? The facts are simply incompatible with this interpretation of the average employer.
Here are some more statistics. Consider the female/male earnings ratio for Canada 1971 for those with a university degree, for all, ever-married, and never-married. Notice the gigantic difference in the last figure: females actually earned 9.8 percent more than males. For a while, I was competing with Walter Williams and Thomas Sowell to see who could get the highest female-to-male ratio for never-marrieds. They were working on U.S. data, me on Canadian. I forget who won this battle, but 9.8 percent is pretty significant.
Consider again the fact that never-married females earn “only” 99.2 percent of what their male counterparts do. Is this incompatible with the marital asymmetry explanation? Not at all. When you’re dealing with statistics, you don’t ever get full clarity. You are not going to get 100 percent. The statistics are always going to diverge a little bit from that “ideal.” Sometimes the data are wrong, sometimes, surveyors make mistakes. And, who says that male and female productivity is exactly equal? The figure 99.2 percent is as close as you are going to get to support a hypothesis in the real world of statistical data.
And the same applies to the figure 93.4 percent, where the wage gap is about 6 percent. But when you get a wage gap of 6 percent as opposed to 30 percent, that’s no gap at all. What I am trying to say is that you cannot expect full support of any hypothesis, such as the marital asymmetry explanation of the male female income gap. The figures vary around 100 percent, some higher, some lower.
Now take the last line of table 1. Here, what we did, instead of comparing male and female based on marital status, we took a proxy variable for ever-married and never-married. What we said is people who are 16–24 are in effect never married (of course there are some exceptions) and compared them to people who are 25 and above, and posited that this latter group is a proxy for the ever marrieds (again, of course, there are exceptions). Look at the resulting female-male ratio, at the gigantic difference there, between all, and the other two groupings. The idea here is that being 25 and above is a proxy variable for being ever-married, because more people who are 25 and above have ever been married, whereas people 16–24, some of them have been married, but fewer, so we’re saying that a proxy variable for never-married is being younger. Look at the gigantic difference in the wage gap. So it’s just another way of indicating what’s going on here. Namely, among the “ever marrieds” here, now shown by age 25+, the wage gap between female and male is about 25 percent. In contrast, amongst those aged 16–24, the gap falls to about 5 percent. Again, why would supposedly male, chauvinistic employers discriminate against women in such different ways, based solely upon their age, of all things?
Let us now summarize this part of the talk. There is a wage gap. The reason that we have a wage gap has got nothing to do with prejudice or discrimination of any kind on the part of the business firm. The reason is different productivity levels. If it weren’t different productivity levels, if they had the same productivity, anyone engaging in discrimination would lose money and tend to go broke. So in the long run, in the marketplace, discrimination would be continually eroded and weeded out; presumably, at any given time, it would be gone.
Okay, I’m going to get into the really radical stuff—the glass ceiling. That is, why are there so many men, and so few women, at the very, very top of virtually all professions, from business to the arts to athletics, to politics to, well, just about everything else? Why is it that women can only rise so high, and no higher? Why do we have a glass ceiling? When Larry Summers asked this, and he said that it is possible that the explanation is that male and female brains are different, he practically got fired as president of Harvard. Well I’m going to go further than him, way further—happily, I won’t get fired as president of Harvard, because I’m not—but I’ll go further than him and say it’s not a possibility, this is a really good explanation for the glass ceiling: biology. That is, women and men are very different biologically, and this alone explains the glass ceiling phenomenon.
How are they different biologically? Well, before I give you my analytic device, let me buttress the case that they are very different. First of all, let’s take prisons. What percentage of men and women are in prisons? Around 95 percent of all prisoners are men, and around 5 percent are women.2 What percent of males and females are in mental institutions? Again, the same sort of statistic arises: around 95 percent of inmates in mental institutions are men, and around 5 percent are women.
What percent of people are in cemeteries before their time? Obviously, at the end of the day, all men and all women end up in cemeteries. None of us escapes life alive. By “before their time” I mean that if you were to look at 25–50-year-olds who are already in cemeteries, whom would we find? Again, you get the same 95 percent – 5 percent split as before. Whether this results from war, or fighting, or gangs, or mayhem, or robberies gone bad, men are vastly overrepresented in this statistic.
This is part and parcel of the glass ceiling, the left tail of the explanation, so to speak. Look at figure 5. What we have here is a frequency distribution; on the x or horizontal axis there is something like I.Q. or ability, however measured. So far I have been describing points A and B. A is on the male curve at the top of the diagram, and B is on the female curve, which juts up in the very middle of the distribution, but otherwise lies below the male curve. If you look at places over here on the far left of the distribution, that is where prisons, cemeteries for people before their age, mental institutions, we find virtually all men and no women. A is in effect the 95 percent I have been talking about, and B is the 5 percent.
Now let us look at the far right side of the distribution. What’s going on here? Well, let’s take grandmasters in chess. It used to be, before the Polgar sisters—anyone into chess here? no—before the Polgar sisters, three Hungarian sisters, the best grandmaster (they have ranking of chess grandmasters), the highest-ranked woman grandmaster was around 450th. Then the Polgar sisters came bursting into the chess world in the last 10, 20 years. They are amazing. The worst of them is around 300th. The second best of the Polgar sisters was roughly the 200th ranked grandmaster. And the best of them I think was ranked 20th. Some ungodly high ranking; the best in all of chess history. Namely, in chess grandmasterships, the men are the 99 percent level and the women are at the 1 percent level.3
Let’s take Nobel prizes. And I’m not talking about wishy-washy, wussy fields like Literature, where they give it to females to even things out. I’m talking about physics, and chemistry, and even economics. In economics, there is but one female Nobel prize winner: Elinor Ostrom in 2009. To the best of my knowledge Madame Curie is the only one who won in physics, or any of the hard sciences.4
In math, they don’t have any Nobel prize, but there is the Fields medal; so far, only men have won. Now let us consider CEOs of companies and presidents of countries. There was Indira Gandhi, Golda Meir, there was Margaret Thatcher, and there was this gal in the Philippines, I forget her name, and that’s about it. Uh, Gloria Arroyo. You know, four that I could name, and that probably exhausts all the ones unless I’m missing Lichtenstein or something like that. We are now talking points C for the men and D for the women.5
Virtually all the leaders, the CEOs, the math, the physics, the chess, are males. It is almost as if males are God’s or nature’s crap shoot, and females are nature’s or God’s insurance policy. Females are all clustered toward the middle. Right? There are very few females out on these tails, whereas men are all over the lot.
I am drawing these frequency distributions to accentuate the point I am trying to make. They are not derived from any official statistics. I am drawing the curves in the way I have so as to make my point clearer. Namely, the variance of women is very low. The standard deviation of women’s abilities is narrow. They are virtually all clustered toward the middle; there are very few outliers. Yes, every once in a while there’s Lizzie Borden who kills someone, but this is very, very rare.
Women are clustered in the middle. That is why we have a glass ceiling. Not because of prejudice, or discrimination, or capitalism being evil, or anything like that. It’s because women are God’s or nature’s insurance policy and men are His crap shoot. And in the crap shoot, some men get very, very good genes, and other men get very bad genes and end up in a bad way.
The question to which I now want to address myself is “Why is it that this is so?” I hope I’ve convinced you that it is so.
Yes?
[Student question.6]
Well, this means that there are a lot of women in the middle, in other words, who have average IQs or average abilities.
Yes, you understand me. These women over here at D are better than these men at A. So “better” means further along to the right on the X axis. It’s IQ or some sort of generalized ability, the kind that gets you Nobel prizes, chess grandmasterships, CEO status, etc.
Let us discuss sociobiology in this regard. Sometimes known as evolutionary psychology by people who want to be politically correct, the theory is that we are the way we are now because of what it took to survive a million or so years ago. We are descended from people who liked babies, who were unhappy with crying babies, and took pleasure from happy babies. Imagine another tribe just like us with the same abilities, the same opposable thumb, the same IQ, only they didn’t care about babies. What would have happened to them? They would not have survived.
Similarly with aggression. Males are much more aggressive than females. Any society composed of, who are those women warriors, what are they called? Amazons. Any Amazon society would not have outcompeted our own. We come from a patriarchal society. An Amazon society that sent the women out to fight and allowed the women to serve as cannon fodder, undertaking dangerous hunting and fighting, would go extinct. Look, the reason the farmer keeps 50 cows and 1 bull and not 50 bulls and 1 cow is because additional males are superfluous. Right? You don’t need that many men to impregnate all the females. But every time you lose a female, you lose population, and if you’re having a competition between our patriarchal society and these other matriarchal societies (if they ever existed in the first place), we whip them because we use the extraneous men, not the precious women, as cannon fodder. Correctly so, from a biological point of view.
Germany and Russia had a fight with each other in World War II, where they kicked the crap out of each other. At the end of that war, there was hardly a man left standing between the ages of 20 and 50; certainly, there were relatively few of this age cohort who were able-bodied. There were a few around. But they were enough, more than enough, to impregnate any woman that wanted to get impregnated. (Laughter) They must have had a grand time; this just shows how generous men are with their sperm. But, the societies lasted. Both Germany and Russia survived.
Now suppose that the war between the Nazis and the commies had been conducted by women, where men were mainly the bystanders, such that there were hardly a woman between 18 and 40 who was alive. There would have been no next generation. You see why it is that women are much more important, biologically, than men are.
Okay, now, here is our own society. I say our society is this way, patriarchal, not matriarchal. One way to prove this to take the opposite scenario, and show why that couldn’t exist. This is an economic way of arguing. You want to prove something? Take its opposite and show why that’s ridiculous.
So, let’s suppose that on figure 5, the curve AC now depicts females, and BD indicates males. The very opposite of our previous, correct assumption. Let’s suppose that there was this other society a million years ago that was just as good as our society in terms of ability, in terms of inventing the wheel, using tools, and just as strong and smart as us, only there, the men were the insurance policy BD—this is now the men, right?—and the females are this group, AC.
Why are we whipping them demographically? First of all, all these females over here at A are going into early graves, they’re going into the caveman version of mental institutions and jails. Right? None of these women are now available for child creation.
So how can this matriarchal society outcompete us when a very high proportion of their women can’t have babies? Or if they have babies, they kill them, or at best mistreat them. Remember, there are now lots of women out there at point A, who are incompetent idiots. Their incompetence places them at the left tail of the distribution. You see that?
On the other hand, these women at C, the ones who were inventing the wheel and better spears and stuff, they’re out hunting wild animals and they are getting decimated. Do you see why a society that’s constituted that way would not compete with ours?
Now look, I have a daughter. I don’t much like this sociobiological analysis because I want her to win a Nobel prize in something or other. She’s a very bright girl. When she was in high school, she used to beat the nerd boys in math and physics. In college, she got great marks. She’s now taking a Ph.D. in neuroscience at Johns Hopkins which is one of the best places in that field. A very bright girl. Very, very bright. She explains to me what she’s doing and I don’t know what the hell she’s talking about. (Laughter) Very bright girl. I’d love for her to be at the top of her profession; break right through the glass ceiling. And she has a chance, just a very small chance, for there are very few girls that are that bright. She is located at point D in figure 8.
I’m not saying to the females in the audience, “Don’t try. Don’t strive. Don’t become a great Austrian economist or a great libertarian.” I’m just saying the odds of a girl being the next Murray Rothbard are much less than a guy being the next Murray Rothbard. Because there are just so few people, so few females out there in the IQ of 180 or 200 or something like that. Very, very few. Males greatly exceed them. C is far greater than D, and remember, we are getting back to reality, C is where leading males are located and D is for their counterpart females.
I don’t much like it. It would be nicer in some way if reality weren’t that way. I take the position I do, however, because I am trying to explain why we have a glass ceiling. And this seems to be the best explanation for that phenomenon.
And with that I stop and now call for questions.
Let me make two comments in response. First of all, you don’t have to be respectful. I mean, as long as you don’t come up to the stage and punch me out (laughter), I’m ok with you raising your point. You’re bigger than I am, and as long as you’re not nasty, I encourage people to ask sharp, acerbic questions. I’m putting forth very controversial views. It would be churlish of me to say “No, you have to treat me with kid gloves.” What I want you to do is to take your best shot, intellectually, as you have been doing, so don’t be apologetic, and say, “Oh, you know, I, I’m trying to be easy on you,” or something like that.
Now, my claim is that there never was any of this discrimination. There never was any of this stuff that critics of the market are alleging. Racism or sexism, or any form of discrimination on the part of the employer do not account for wage differentials, nor did they ever. If there was any of this sort of thing in operation, the market would have eradicated it. Could there be some vestiges of it? Sure. The market is not perfect, but the market keeps grinding away at people who pay women lower than their productivity levels.
On the other hand, do not forget, there is such a thing as consumer discrimination. If whites in the south in past decades did not want to sit at the same lunch counters with blacks, and the employer banned blacks outright, or arranged to have them sit at a different part of the restaurant, that counts as consumer, not firm, discrimination.
So there were never any restrictions on entry or any of that stuff. Women, for many years, could go to law school or whatever, or become a doctor. There were very few of them that wanted to be, so that would be my rough answer to the question.
I’m not assuming that the market is perfectly competitive. It would take me too far afield to give the Austrian critique of this concept. Suffice it to say that I am assuming rivalrous competition; in effect, that there are no barriers to entry. If profits rise in an industry, no law bars newcomers. Based on this, there is a tendency in this direction of equating wages and productivity levels. The real reason women were not or are not doing as well as men in terms of wages was because of productivity differences, not employer discrimination. Not because of culture, because culture emanates from biology, and biology plays a great role in male-female differences.
Yes, there is discrimination on the part of consumers. When you go to a Chinese restaurant, most consumers want to have a Chinese waiter, even though you don’t really need one, nor do you really need a Chinese chef, because surely Westerners can cook just as well as the Chinese if they just learn how to do it. It’s just that consumers want this.
Similarly, with airplanes, it used to be that the stewardesses all had mini-skirts, because the airlines couldn’t compete on the basis of price, so they started competing in terms of shortness of skirts, youth and beauty of the women. And most men want to see young scantily clad women. There are sociobiological reasons for this too. Suppose a different culture had as its male ideal women between the ages of, say, 50–70; while ours focused on females between the ages of, oh, 18–35. Those guys salivated over older women, and pretty much ignored younger ones as sex objects, the opposite of typical male reaction in our own society. Who would win the biological competition? Obviously, we would out-compete them. In the extreme, if none of their males coupled with young women, but only much older ones, they would die out in just one generation. Actresses of a certain age complain they can no longer get leading roles. This is why.
It is only because of affirmative action that you have male stewardesses, what do you call them? Flight attendants. If not for that, they’d all be female and they’d be young and pretty. In the free society, there would be ageist discrimination like it used to be decades ago. Firms would fire a stewardess after she got to be 30 or so, so there would always be young ones, because men want young women for sociobiological reasons.
Let me take another hack at this. Imagine there was a society where when the males saw a woman in her 60s they said, “Whoop dee do. Let me at her.” And when they saw a woman of about 25, they said, “Nnnn, not ripe yet.” How many babies would that society have? Not too many. The reason our males find a 25-year-old woman more attractive than a 65-year-old woman, despite the fact that there are some 65-year-old women who are very attractive, but men gravitate toward the 25-year-old is because we descend from a tribe that liked 25-year-olds because if they liked 65-year-olds, we would no longer be around because you can’t have babies with them.
There was this MIT case, where the women in the physics department were moaning that their offices were smaller and the male physicists had more staff and higher salary. But if you look at their publications, and their publications are supposed to be double-blind refereed so you don’t know who the sex of the author is, I would imagine, I haven’t discovered this or haven’t examined this because there had been no statistics forthcoming, but I would imagine that all the female ones that were married had way fewer publications and lower-quality publications than the males, because of this interest in the home and all. It is more than passing curious that information of this sort was never forthcoming in this imbroglio.
I suspect that most of the females in physics and math are there in the first place due to some sort of affirmative action. When Harvard President Larry Summers was apologizing for daring to discuss these issues, he promised a new $50 million program to hire female scientists. Well, when he uses $50 million to hire female scientists, the money will not go to the best scientists, who are male. Rather, this is an affirmative action for female scientists, not the first one either.
All I can say is that if women or blacks are more productive, they will be paid more. Oprah Winfrey is a black woman and she is paid very well, she is probably in the highest one-tenth of one percent of all wage earners. And the reason is she can put people in the stands and she interests them and they buy products that she endorses.
Suppose I said, “Well, she’s a black and a woman and therefore I’m not going to hire her for any amount of money.” I wouldn’t be making much profit. The guy who did hire her would make more than I, and be able to drive me out of business. And what about all those black rap stars, athletes, musicians, actors? It is the same with female actresses, movie stars, popular singers. The ones who sell lots of tickets, who attract avid customers, are compensated very well.
Of course, these are exceptions. Most women are clustered in the middle of the distribution and are paid accordingly.
I agree with you. When we have things like the minimum wage law, it exacerbates these problems.
Thanks for your attention.
_____________________
This is excerpted from a speech given by Walter Block at Mises University, Auburn, Alabama in the summer of 2005.
1 Walter Block, “Economic Intervention, Discrimination, and Unforeseen Consequences,” in Discrimination, Affirmative, Action and Equal Opportunity, Walter Block and Michael A. Walker, eds., Vancouver: The Fraser Institute, 1982), pp. 101–25.
2 Editor’s Note: “By yearend 2002, women accounted for 6.8 percent of all prisoners, up from 6.1 percent in 1995. Relative to their number in the U.S. resident population, men were about 15 times more likely than women to be in a State or Federal prison. At yearend 2002, there were 60 sentenced female inmates per 100,000 women, compared to 906 sentenced male inmates per 100,000 men.” Paige M. Harrison and Allen J. Beck, Ph.D., “Prisoners in 2002,” Bureau of Justice Statistics Bulletin (July 2003), http://www.ojp.usdoj.gov/bjs/pub/pdf/p02.pdf.
3 Editor’s note: As of October 2006, Judit Polgar is the #1 ranked woman in the world, and #16 overall. Zsuzsa (Susan) Polgar has been ranked as high as the #1 woman in the world, but she has not made the Top 100 overall. The third sister, Sofia, is an International Master, but not a Grandmaster. There are nearly 1000 grandmasters, so she is not in the top 1000 overall. Thus, there is exactly 1 woman in the top 100 chess players, or 1 percent. For the ratings by the Federation Internationale des Eches (World Chess Federation), see: www.fide.com/ratings/toplist.phtml
See also: http://en.wikipedia.org/wiki/Judit_Polgar.
4 Editor’s note: “Female Nobel Prize laureates accounted for 34 out of a total of 723 prizes awarded as of 2005. Marie Curie is not only the first woman to be awarded a Nobel Prize, but also one of four persons to have been awarded the Nobel Prize twice,” according to: http://en.wikipedia.org/wiki/Female_Nobel_Prize_laureates.
There have been 11 women who won the Nobel in hard sciences: 3 in chemistry (out of 148), 2 in physics (out of 176), and 7 in physiology/medicine (out of 183). Even Literature has had only 10, compared to 102 men. The Peace Prize has had 2 women, compared to 114 men. In Literature, women won 10 times (out of 102), including 1991, 1993, 1996, and 2004, so even in our P.C. era, women aren’t winning this award all that frequently.
5 Editor’s Note: http://en.wikipedia.org/wiki/List_of_Female_Presidents shows 39 women presidents between 1953 and 2006. Wikipedia lists 98 countries with presidents at http://en.wikipedia.org/wiki/Category:Presidents, but of these, it lists only 7 current female heads of government: Gloria Macapagal-Arroyo is President of the Phillippines, Helen Clark is Prime Minister of New Zealand, Luisa Diogo is Prime Minister of Mozambique, Ellen Johnson-Sirleaf is President of Liberia, Angela Merkel is Chancellor of Germany, Maria do Carmo Silveira is Prime Minister of the Democratic Republic of São Tomé and Príncipe, and Khaleda Zia is Prime Minister of Bangladesh. Given the roughly two hundred countries currently in existence, the 7 women heads of government amount to approximately 3–4 percent.
6 The student question was not clear on the tape recording, but the meaning can be inferred from the answer.
7 Editor’s note: The student questions were unintelligible on the tape. What follows are the answers, alone. Hopefully, the intelligibility will be attained through the context.
