David Solomon, the CEO of Goldman Sachs Group, Inc., suggested last week at the World Economic Forum in Davos that, from July onward, the company "won't manage the initial public offerings of American and European companies unless they have at least one non-white or non-straight male board candidate."  In 2021, he says the company will "move toward ... requesting two." 

"[W]e're not going to take a company public unless there's at least one diverse board candidate, with a focus on women," Solomon boldly said.

This is a "vision," according to Eliza Martinuzzi at Bloomberg, "for his bank's role in imposing better governance on its clients."

That's a curious framing of what is clearly a racist and sexist new investment banking policy, which (for good measure, and to score added points with the wokescolds, I suppose) also openly discriminates against heterosexuals.  What Martinuzzi means when she says Goldman Sachs will be "imposing better governance" on its clients is that the investment banking firm will be demanding that its business partners snap to form in embracing diversity as a corporate sacrament. 

But is Goldman Sachs really in any position to make demands of its clients and "impose" a standard that they have boards of directors with a specific makeup when it comes to race, sex, or sexual orientation? 

Not really.  Investment banks like Goldman Sachs compete to underwrite stock issuances when companies seek to go public.  For example, let's say Company A has been successfully making and selling widgets for two decades.  Now Company A is looking to raise capital in order to expand its business and looks to offer partial ownership of the company by issuing stock in an initial public offering (IPO).  Investment banks will gauge the market's appetite for the stock, quantified as a number of shares and a price, and negotiate the fees for marketing and distributing the shares of stock.  If the business opportunity is lucrative enough, the competition might be tight and fierce.

To put it bluntly, while Goldman Sachs is a big player in that market space, it's not the only show in town.  Other investment banks may be courting Company A's business, too, like Goldman's two largest competitors, JPMorgan Chase and Morgan Stanley.  Neither of them has yet followed suit in announcing such an openly discriminatory policy to pacify to the woke mobs.

Company A has choices, you see, and doesn't have to abide by Goldman's arbitrary new standards when deciding upon its own board of directors.  That's a key feature of free markets that progressives often lament.  You see, progressives can't stand that free markets impede what they consider to be social progress (though in this case, the "progress" they seek is open discrimination against straight white men). 

Progressives view government regulation as a cattle prod to enact the social changes they desire among the populace and would like nothing more than to apply that same mechanism to the free market.  But absent government regulation, Goldman has given the corporate world "a good start," according to Eliza Martinuzzi.  She concedes that Goldman Sachs is likely doing all of this only to shed its "vampire squid" image as a "pure opportunist," but "whatever the motivation, pushing for greater diversity ups the collective pressure on other financiers to use their power for good.  Over to you, Morgan Stanley and JPMorgan," she writes. 

Interestingly, she seems to recognize that market competition renders Goldman's policy toothless without conformity from its competitors.  In other words, until the government can force businesses to have boards of directors of which progressives approve, Goldman Sachs pressuring its competitors to follow suit in discriminating against straight white males will, begrudgingly, simply have to do.

A question remains.  How will this public proclamation of an openly discriminatory policy benefit Goldman Sachs (aside from such embarrassingly tepid accolades by progressive pundits like Eliza Martinuzzi, that is)? 

After all, if Company A is poised to sell five million units of a groundbreaking new product, which is more important?  That five million units will likely be sold and substantial profits earned or the fact that the six people on the company's board of directors are white guys?  Goldman Sachs now has a publicly declared policy that suggests that the latter observation is so important that Company A's immense potential for financial success is irrelevant.  And Goldman's biggest competitors have made no strict proclamations to similarly discriminate against potential business partners, so nothing will inhibit them from making an attractive offer to Company A, which may give them a decided edge in the marketplace.

In the end, if Goldman Sachs really wanted to discriminate against companies with all-white boards of directors, a public announcement wouldn't have been necessary.  The firm could simply not make any bids to underwrite IPOs for those companies.  No fanfare, but the mission would be generally accomplished.  Rather than do that, they instead chose to create a public spectacle by saying that they would openly discriminate against those companies on the basis of their potential clients' race, sex, and sexual orientation.  And that is because the public spectacle about the obvious discrimination is the point.

Think about that choice for a moment, in the context of a more day-to-day circumstance than the world of large and lucrative IPOs.  Imagine that a regional bank institutes a sinister policy to discriminate against potential borrowers who are black.  If the bank truly desires an outcome where it won't be doing business with black borrowers, the bank might invent several reasons why each loan to a black couple is denied, i.e., short credit history, short employment history, lack of collateral, etc. 

Now, that would open this hypothetical bank up to massive amounts of liability, as, upon any investigation, the bank would have to prove that it also denied loans to similar white applicants, thereby proving there was no racial discrimination applied in its business practices.  But riddle me this -- how could that massive liability be any less than that bank openly proclaiming that that it would not be doing any business with two potential borrowers who happen to be black, and instituting a strict policy that one of the two potential borrowers would have to be non-black to be offered a loan? 

If that inverse scenario is clearly not legal or socially acceptable, how can it possibly be that an investment bank's policy to discriminate against any business with an all-white male board of directors is not only assumed to be legal, but celebrated as some sort of social victory?

One would have to harbor a diseased sense of morality, indeed, to consider such an openly discriminatory and bigoted policy to be any kind of social "progress."