If sexist inefficiencies are sustainable in free markets, there are deeper problems in them

Free markets work properly when the free exchange of (services and) resources produces the most efficient allocation of said resources, e.g. Pareto efficiency. This may not always happen.

For example, if Alison is 2.5 times better than Bob for the same role, and Alison gets paid 20% less than Bob, then Alison provides a much greater margin and competitive advantage than Bob to any company hiring her. Logically companies would compete to hire Alison (and people similar to her), and as a consequence, the invisible hand of the free markets would adjust salaries, so that Alison gets 2.5 times Bob’s salary.

Clearly, this does not happen, the job market is fairly free, but it does not work properly. There are sexist inefficiencies. In fact, these inefficiencies are probably so significant and profitable that companies can afford a number of initiatives to pretend to fight them and to be “women-friendly” and still win. Furthermore, due to such initiatives, some men say it’s gone too far.

Otherwise we would need to conclude that companies have such initiatives at a loss, i.e. companies losing money to try to fix an inefficiency in markets. This scenario is unlikely, in a more likely scenario, companies . With independence of the most likely scenario, the inefficiency is clearly present in both of them.

Testing shows the presence, not the absence of bugs

Edsger Dijkstra

The problem once that we have detected that some (i.e. sexist) inefficiencies are present in the system is that the principles in its design clearly do not work, we cannot assume that the system works efficiently, and many other inefficiencies may be present. Some of these inefficiencies will be presented in other posts.

On the positive side, addressing the inefficiencies in the system can be very profitable. We will probably see some “women-only” or “primarily-women” startups, and they will probably do very well. Two things should be considered in this context:

  1. Compete for the general market, do not necessarily restrict yourselves to women-specific products or services.
  2. When fighting prejudice, address female VCs, or rely on male colleagues for that. There is no need for martyrs in the fight with prejudice.

With sexist inefficiencies in the job market, both men and women feel that they are losing, which is probably true. Women get less salary, and some cheap “benefits” in exchange. Men get discrimination in these “benefits”, and very likely they will get a lower salary too, if they do not want to be replaced by women. In the end, the “divide and rule” principle may be working very well for companies.

We should all strive to solve sexist inefficiencies in the job market, but in more importantly we should strive to solve the problems in our economic systems, due to the impact that they have when building the future. We can find many reasons to think that the present is better than the past, but this is not as good as it gets, we must continue, and even faster if possible.


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