Two sorts of diversity must be distinguished: one that develops on the market and in other forms of free interpersonal relations in response to the different preferences, values, and discoveries of individuals; and another one, decreed by a government, public institution, or public authority, representing a majority or a minority of voters, on the basis of what it thinks that diversity should be. A decree, of course, is not a pious wish: everybody must legally comply. “Be diverse, or else!”

An example of the second sort is illustrated by a news item in The Economist (“Business This Week,” August 14, 2021):

America’s Securities and Exchange Commission approved a controversial requirement by the Nasdaq for companies that list on its markets to disclose statistics on the diversity of their boards and to have at least two “diverse directors”, or explain why they do not. One director must be a woman and the other from a racial or sexual minority.

It is important to realize that, probably since Franklin D. Roosevelt, exchanges such as today’s Nasdaq are not private associations, but organizations that enforce state controls and decrees and, as we see in this case, must have their policies explicitly or implicitly approved by their real boss, Big Brother himself. It is apparently part of a general trend whereby the federal government indirectly imposes measures that would be constitutionally forbidden or doubtful if imposed directly.

One point that is perhaps not crystal clear in The Economist‘s blurb is that it is indeed the “gender” composition of boards, not its sexual composition, that is targeted: anybody may self-identify as a man, a woman, or a non-binary. Membership in the racial or ethnic groups, as well as in the sexual LGBTQ+ group, is also largely self-identified.

Of course, everybody is or should be free to identify as what he wants, provided he does not force others to recognize or reward his self-identification. (You may self-identify as a Great Turkey, but I should not be forced to treat you as such.) But in a free society, it would be unacceptable to coerce people into identifying with the groups in which some authority wants to imprison them.

More precisely, the Nasdaq proposed regulation that was was approved by the Securities and Exchange Commission (SEC), as published in the Federal Register, obliges any Nasdaq listed company

to have, or explain why it does not have, at least two members of its board of directors who are Diverse, including at least one Diverse director who self-identifies as Female and at least one Diverse director who self-identifies as an Underrepresented Minority or LGBTQ+. Pursuant to proposed Rule 5605(f)(1), ‘‘Diverse’’ would be defined to mean an individual who self-identifies in one or more of the following categories: (i) Female, (ii) Underrepresented Minority, or (iii) LGBTQ+. Also pursuant to proposed Rule 5605(f)(1), ‘‘Female’’ would be defined to mean an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth; ‘‘Underrepresented Minority’’ would be defined to mean an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities; and ‘‘LGBTQ+’’ would be defined to mean an individual who self-identifies as any of the following: Lesbian, gay, bisexual, transgender, or as a member of the queer community.

Each corporation listed on Nasdaq now has to publish a Board Diversity Matrix providing the number of board members who self-identify with each of the regulatory categories and subcategories, as well as the number of individuals who declined to be fitted into these group identities.

The SEC’s Order (reminder: it’s an order, not a loving wish), which was also published in the Federal Register of August 12, also explains the purported usefulness of this new regulation:

The Commission finds that the Board Diversity Proposal would provide widely available, consistent, and comparable information that would contribute to investors’ investment and voting decisions. … The reduced cost and improved efficiency in collecting, using, and comparing such information could enhance investors’ investment and voting decision-making processes, and enhance investors’ ability to make informed investment and voting decisions. Because the proposal would make such information widely available on the same basis to all investors, the proposal would also mitigate any concerns regarding unequal access to information that may currently exist between certain (likely larger and more resourceful) investors who could obtain the information and other (likely smaller) investors who may not be able to do so. Accordingly, the Commission finds that the proposal is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and protect investors and the public interest.

We see in action the principle that if you give Leviathan one inch, he will take a mile. The New Deal securities laws were justified by the goal of providing more information to investors. This information is now deemed to include the gender, sexual (“LGBTQ+”), racial, and ethnic composition of the Nasdaq-listed companies’ boards. One question is, in how many years will the government and its minion organizations impose discrimination mandates instead of mere information requirements?

For now, an actual or potential board member will be able to self-identify as belonging to any group on the list. A non-Diverse white male board member or candidate thereof could identify as a black woman. It is not totally inconceivable that a company wanting to show good PC statistics could exert gentle influence on a board member to check the right box. But these incentives may be muted, if only because a man who identifies as a woman “just for my career” might get objections from his wife or girlfriends. What is sure is that the price of the members of the favored groups on the list (that is, their compensation) will increase on the market for board members, compared to the price of non-favored board material.

What sort of discrimination is popular today may shift in the future. Now, just think how this kind of board diversity order would have been useful to bigots in the Jim Crow South by ratting on corporations with too many black directors.

At another level, what’s a better way to advance collectivism than to have government incentivize individuals to identify with a group? At any rate, it is pretty clear that the new regulation will further intensify the politicization of corporations and fuel the flames of race and identity wars. Changes in the official list of privileged groups have already been proposed.

Marx believed that capitalism would break down under its own contradictions. This fate is more likely to hit its degenerate, woke, crony fake.