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Friday, July 19, 2024

Wall Street Journal Reveals DEI Did Nothing for Corporate Profits

'Academics can’t replicate McKinsey’s study precisely, because it keeps secret the names of the companies it used...'

(Jacob Bruns, Headline USA) The left’s longstanding attempts to celebrate and enforce Diversity, Equity and Inclusion have backfired, failing to create the promised increase in corporate profits, the Wall Street Journal reported.

The myth that DEI is good for corporate profits began long ago, when the state attempted to leverage its power to help those at a perceived market disadvantage, such as women or minorities.

By 2015, studies were being published suggesting that not only was DEI necessary as a matter of justice, but that it was also financially beneficial for corporations to partake in it.

The most notable of those studies was conducted by the management consulting firm McKinsey—which, in 2015, declared that DEI was a boon for business and corporate profits.

Leading investment companies such as BlackRock dove headfirst into the new strategy, eager for a business model that aligned better with the values of Manhattanites and other bicostal elites who undoubtedly disdained the corporate world’s long-running love affair with conservative-friendly capitalism.

Putting a greater emphasis on social capital over shareholder returns allowed them to stave off negative publicity over their less savory practices—for example, the exploitation of Chinese slave labor—by simply virtue signaling toward a handful of woke objectives.

From the initial desire for greater corporate diversity soon was spawned the Environmental, Social and Governance movement, exerting pressure on companies to follow a political agenda through targeted investment and divestment strategies.

However, the McKinsey experiment has not been replicated since, despite several attempts, leading to concerns that the methodology is incapable of leading to conclusive results.

Other studies conducted recently have, in fact, concluded that there is no link whatsoever between DEI policies and corporate success, suggesting that the McKinsey findings are either outdated or downright unreliable.

McKinsey, however, doubled down on its original findings.

“In light of a recent study criticizing our methodologies, we have reviewed our research and continue to stand by its findings—that diverse leadership teams are associated with a higher likelihood of financial outperformance,” a representative for organization wrote.

They also backed off their prior thesis, suggesting that their “research identifies correlation, not causation.”

Still, according to the WSJ report, McKinsey still acts as if the study did in fact prove causation while correlation likewise cannot be clearly replicated.

“Even the correlation is in doubt,” the author, James Mackintosh says. “Academics can’t replicate McKinsey’s study precisely, because it keeps secret the names of the companies it used.”

Mackintosh further pointed out that such a simple mistake as confusing correlation with causation has historically led to the barbaric self-annihilation of peoples.

“The Aztecs mistook correlation for causation with tragic results, cutting out the heart of a victim to rekindle fire every 52 years in order to ensure the world’s survival,” he wrote. “There was a strong correlation between the human sacrifice and the world not ending—but no causation.”

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