There’s no end of ‘zombie facts’: things that are just not true, but almost everyone believes. ‘Science says bumblebees can’t fly.’ ‘You can see the Great Wall of China from space.’ ‘Islam is a religion of peace.’
Too often, even the origins of such zombie facts are obscure. The ‘bumblebee’ myth is loosely attributed to a supposed dinner-party conversation between a aerodynamicist and an entomologist in either Germany, Switzerland or France, allegedly in the 1930s.
In the case of one of the most infuriating modern ‘zombie facts’, though, we know exactly where it comes from – which also explains why it’s a load of obvious dogs’ bollocks.
Studies prove that diversity is our strength.
Like the myth of lower immigrant crime, this modern fairy tale has acquired its spurious legitimacy simply by dint of being endlessly parroted by media and politicians. Peel back the layers of repetition, though, and what we find is a single, beyond-unreliable source, spouting obvious bullshit.
McKinsey & Company, the famous management consulting firm, has published a number of wildly popular reports during the Great Awokening – such as 2015’s “Diversity Matters,” 2018’s “Delivering Through Diversity,” 2020’s “Diversity Wins,” and 2023’s “Diversity Matters Even More” – asserting that gender and ethnic diversity in corporate management is a magic bullet for making money.
McKinsey is absolutely not a disinterested scientific organisation. It’s a for-profit business that makes money telling clueless suits in the C-suite exactly what they want to hear.
London Business School professor of finance Alex Edmans, whose blog and book both titled May Contain Lies examines the abuse of statistics in order to peddle misinformation, is scathing about McKinsey’s river of horse-shit.
The paper is remarkably non-transparent about its methodology. The body of the paper never describes the sample of firms included in the study, what their dependent and independent variables are, and so on. This may be to stop people replicating their study as their prior research was found to be irreplicable. It is as if they hope that people will accept the results because they want them to be true, and not ask any questions (again, the opposite of diversity of thought) […]
But the McKinsey study makes an even more basic error absent from the other studies: they measure diversity after they measure financial performance! In their own words, ‘The analysis of this report is based on 2022 data on diversity in leadership teams and 2017-2021 data on financial performance’.
To understand how flawed this thinking is, consider a sports analogy.
Were the Los Angeles Dodgers the highest-revenue franchise from 2017 to 2021 because in the 2023–2024 offseason they invested over $1 billion dollars in two Japanese stars, Shohei Ohtani and Yoshinobu Yamamoto? Or is Los Angeles already being the richest franchise why Dodgers were, as expected, able to afford the top two Japanese players?
The answer is obvious – and it applies equally to the ‘diversity is our strength’ claims. Financially successful companies are able to indulge in luxury nonsense like ‘diversity’. Consider, after all, the opposite – how many companies are forced to drop DEI virtue-signalling as their stock crashes and burns.
But McKinsey’s ‘research’ is even more flawed than that.
McKinsey reports only one measure of profitability, Earnings Before Income and Taxes:
McKinsey’s earlier results were earlier shown to be untrue for all of these alternative profitability measures, leading to concerns about cherry picking the one measure that worked.
And why not report what really matters […] Total Shareholder Return. TSR is what investors actually receive. TSR is far more comprehensive than EBIT (or any profitability measure).
One of the strongest counter-arguments to ‘diversity is our strength’ are tech companies. These are dominated by white and Asian (who are, remember, ‘white-adjacent’, according to the DEI fanatics) men.
A legendary Silicon Valley investor once told me he’d analyzed the founding teams of over 150 “unicorn” start-ups with valuations of at least one billion dollars. Only three had female founders, and they were part of husband-wife pairs.
In the end, money talks louder than any DEI seminar.
Anybody could have sat in his pajamas and counted the diversity of publicly traded firms’ leadership and invested in the most diverse ones. Yet, I’ve seldom heard of anybody trying to beat the market by doing it.
It’s almost as if people tend to believe our orthodox cant about diversity with the part of their brain devoted to being socially acceptable, yet simultaneously disbelieve it with another part dedicated to making money.
As the saying goes, money talks, bullshit – especially ‘DEI’ – walks.
