What do readers in Silicon Valley make of the Ellen Pao case against Kleiner Perkins?

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Silicon Valley friends: What do you make of the lawsuit by Ellen Pao against Kleiner Perkins? (USA Today) The standard employment discrimination case, to my mind, starts with the principal-agent problem. It is another way for managers to cheat shareholder-owners, the same way that they might by moving the company headquarters to a different suburb in order to shorten their commute. The managers indulge their personal preference for hiring buddies, people that they think will be fun to work with, etc., regardless of the fact that more qualified workers are available at a lower price. But the Kleiner Perkins partners are compensated strictly according to their funds’ performance. (Perhaps still the standard “2 and 20″ structure where they get 2 percent of the fund every year just for showing up and then 20 percent of any profits, even if the profits are driven by inflation and the fund underperforms the S&P 500.) So if Pao’s allegations are true, i.e., that she was doing a great job and producing profits, the greedy venture capitalists stand accused of intentionally making themselves poorer simply so that they would not have to look at an additional woman in the office (25 percent of Kleiner Perkins partners are female, according to Wikipedia, but it is unclear what the percentage would be for the entire office). Econ 101 would predict that those partners would have been happy to have a green Martian in the office if he/she were making money for them.

I haven’t set foot inside Kleiner Perkins for about a decade so I don’t feel qualified to comment on the likely merits of the case. What do Silicon Valley readers think?

Sidenote: Pao is married to Buddy Fletcher, a former hedge fund manager who was a successful plaintiff against Kidder Peabody, initially alleging race discrimination. Wikipedia says that prior to his marriage he was “in a same-sex relationship with Hobart V. ‘Bo’ Fowlkes Jr. for over 10 years” so presumably his lawyers had to choose between alleging that Kidder Peabody discriminated against him because of his skin color or his sexual orientation (at the time).

Related:

Gary Shteyngart Watches TV

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If you’re a Gary Shteyngart fan, you’ll want to read this New York Times Magazine article where he writes about a week spent watching Russian television. Tough material to work with but Shteyngart succeeds in my opinion. If you’re curious to know about psychoanalysis, the article provides a window into the modern practice.

This is also a great article for Bostonians looking for ideas on how to spend the next few blizzards…

Related:

 

Is it bad that men and women are evaluated differently?

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In the past month or so I’ve looked at a bunch of articles about how men and women are evaluated differently.

Then Matt Guthmiller showed up to a talk that I was giving at MIT. He is an MIT sophomore and the youngest person ever to fly around the world. He did his trip in a piston-engine unpressurized Beechcraft Bonanza with rear seats replaced by a ferry tank. The longest leg was 16 hours (American Samoa to Hawaii). He was by himself. I asked him how successful he’d been at getting speaking engagements from business groups eager to have him inspire their workers about self-reliance and decision-making under pressure. It turned out that Amelia Rose Earhart, who did a round-the-world trip is in much higher demand as a speaker (video example). Let’s compare the two achievements.

Guthmiller was 19. Nobody younger had ever flown around the world. Earhart was 31 (but in great shape!) and journalists reported that she was the youngest woman ever to fly around the world, ignoring Richarda Morrow-Tait (who did the trip at age 25, leaving her husband and toddler daughter behind in 1948; Morrow-Tait returned home pregnant with her navigator’s child. In 1951, her husband was successful in divorcing her on the grounds of adultery, but Richarda got custody.).

Guthmiller flew solo in a plane that has to go through the weather. Earhart flew with Shane Jordan, a former Pilatus factory pilot and flight instructor, a man with 4500 hours of experience with the Pilatus PC-12, the $4.7 million turboprop that they flew (courtesy of Pilatus and Honeywell!). The PC-12 is a single-pilot aircraft, which means that from a legal point of view Jordan could have done the trip without anyone else on board the aircraft. From an FAA point of view, Amelia Rose Earhart was essentially a passenger. The PC-12 can fly at 30,000′, which is above much of the nasty weather that Guthmiller had to fly through at 10,000′.

In the case of “What do you have to do to impress people with a round-the-world trip?” it seems that women have to do much less than men. If the articles cited above are right, women have to do more than men in other arenas, or at least do things differently to succeed.

But then I thought that perhaps this is actually a good thing. If there were truly one set of standards for everyone, what would be the point of all of the money and effort that companies put into “diversity”? If the tests were comprehensive and perfectly fair, all workers would converge to having the same behaviors and characteristics, sort of like what happens with Ivy League students. At that point there is no diversity in behavior or attitude.

Another way to say this is “If we rewarded women for acting just like men then why wouldn’t they all act just like men and thus eliminate any benefit to hiring women?”

Related:

Scott Walker and the University of Wisconsin

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Scott Walker is in the news for wanting to cut the budget of the University of Wisconsin by 2.5 percent and/or tweak the mission statement to include vocational readiness (nytimes).

A vocational mission for the university doesn’t make a lot of sense in a state where child support is typically a flat 17 percent of the defendant’s pre-tax income, without any limit. A person who wants to have the spending power of, e.g., a veterinarian, doesn’t need to go to the University of Wisconsin’s vet school. He or she can simply have sex with three veterinarians (married or single, drunk or sober), obtain custody of the resulting children, and then collect roughly one third of each vet’s after-tax income (17 percent pre-tax being approximately 33 percent after tax). Wisconsonians can go to college and work to do things that they love and find personally rewarding; if they want cash they can get it more straightforwardly and securely from having children.

What about the cuts? Is 2.5 percent really that bad? Since universities don’t strive for operating efficiency and since they are big employers, subject to an ever-increasing array of costs, absent structural changes the university probably needs at least 4 percent more each year just to stay even. So a 2.5 percent cut is likely a 6.5 percent cut compared to what the university had been planning. Could the university absorb these cuts and still operate in the traditional “stick speaking human in the front of a classroom full of listening humans” manner? Sure. In the book Higher Education? the authors back out the numbers and find that colleges are paying professors between $242 and $820 per teaching/office hour. You can’t spit in the street in Madison without hitting a PhD, many of whom would be delighted to work as adjuncts for a lot less than that. The simplest ways for the university to respond to budget cuts would be (1) eliminate tenure so that it doesn’t have to pay a lot of professors that it doesn’t actually want, and (2) offer to pay anyone qualified a straight $50/hour to teach classes. They could then look at cutting back on some of the administrative positions that they’ve added over the past few decades.

Were we totally lame back in the old days? (comparing True Grit 2010 and 1969)

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Old people (like me!) love to talk about how comparatively lame the younger generation is. But during the various Boston blizzards we managed to watch two versions of True Grit: 2010 and 1969. The older movie is, in my opinion, so cheesy by comparison that it calls into question any right that older generations have to criticize the young.

There are some parts of the old movie that I did like, e.g., the children swinging in the playground during the hanging of three criminals, and the table full of guns and ammo belts just outside the courtroom (like the pile of cell phones that they would have today). But the entire thing seemed to be filmed more or less in the middle of the day and in terrain that was not plausibly Oklahoman.

[Separately, what do gun owners think of the 1969 movie? The sheriff points her father's pistol at Mattie as part of the process of returning it to her. John Wayne then waves the pistol around wildly on a crowded street. At the end of the movie Mattie points the gun at John Wayne while trying to hand it to him at the gravesite. I'm not a gun expert, but wouldn't people who carry guns all day know a little more about basic safety?]

Math professor trashes K-12 math class

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“The real reason why the US is falling behind in math” is a math professor’s take on “Why Johnny can’t do math.”

This is consistent with my experience as a tutor in the Cambridge Public Schools. High school students would be given about 50 identical problems on one page, each one starting with the equation of a circle with a goal of finding the center and radius. There was some sort of trick that one could use and they were better at it than I, but they struggled sometimes with arithmetic on the coefficients. I would ask them to back up and graph one of these equations so that I could understand it and they would say that they didn’t want to, didn’t know how to, etc., even though they all had graphing calculators. The goal of the school was to get the students to the point where they could crush the MCAS and some other standardized tests but the problems had nothing to do with what I would call “math” (and I was an undergrad math major before I found that I had to agree with Barbie that “math is hard [and frustrating]“).

Happy Valentine’s Day

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Happy Valentine’s Day to all of my readers! Of all of the Hallmark Holidays this might be my favorite.

When Americans talk about gay marriage do they know what marriage is?

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Because of my work as a co-author of a book on divorce laws nationwide, friends always seem to contact me when they have a divorce-related question. Here’s an exchange that I had recently with a friend who has an advanced degree in social science and who is married with children. I’ll call him “Joe.”

  • Joe: “Can you talk to my friend? His wife is putting him through hell. She’s hired one of the top divorce lawyers in the state and is making all kinds of accusations. about abuse, child abuse, etc.”
  • Me: “He should ignore all of that. Based on our interviews, virtually every plaintiff alleges abuse and judges mostly don’t believe them. He should focus on cooperating with his former spouse  so that the judge can feel comfortable awarding a 50/50 shared parenting schedule, which is what the researchers find is best for children. If he fights her on all of the little stuff that weakens his case for 50/50 parenting, so he should just cave in.”
  • Joe: “But she wants to control everything about how interacts with their child. The child can’t go to certain playgrounds because she’ll get hurt, the child can’t see certain people because they’re unsafe.”
  • Me: “He should just graciously agree to do his best to comply with her conditions. What is she going to do? Go to court later and file a motion that he agreed not to take the child to playground X and the father took the child to playground X? The first question from the judge is going to be ‘Did the child actually get hurt?’ If the answer is ‘no’ then the motion hearing is likely over.”
  • Joe: “He can’t let her just get away with all of this and push him around.”
  • Me: “Why not? The only thing that matters is the schedule, keeping her from moving out of state with the child, and preserving some sort of ability for coordination and cooperation. Has he asked her to mediate? Litigation is extremely harmful to children and poisons any kind of co-parenting, according to the lawyers we interviewed and the research literature. If he is forced by his wife to continue litigating, some of the best advice to readers that we got for the book was from a Massachusetts business litigator whose friend kept defending family court motions filed by his ex-wife [they'd been divorced for many years but she kept coming back for more cash, using a 22-year-old child as a hook; he lost nearly all of these proceedings; a Massachusetts parent can profit from obtaining child custody until the child's 23rd birthday]: ‘You know that the game is rigged. Why are you swinging at every pitch?’”
  • Joe: “What do you mean litigation?”
  • Me: “Well, she sued him. A divorce lawsuit is the same as if you sued a guy for charging you to dig a pool in your backyard but not finishing the digging. You wouldn’t expect ever to be able to cooperate with that guy again after you sued him and threw allegations back and forth in court, would you?”
  • Joe: “Actually I think he was the one who filed for divorce. But how is that a lawsuit?”
  • Me: “The only structural difference between that and you suing the pool contractor is that your friend is guaranteed to win his lawsuit because your state has no-fault divorce. But otherwise it is the same. Lawyers, witnesses, evidence, etc. It is an adversarial process that turns co-parents who need to cooperate for their child’s benefit into adversaries, typically permanently if the litigators are to be believed.”
  • Joe: “What’s the alternative?”
  • Me: “Suppose that you decide that you really need to be with some hot 25-year-old. You could try to surprise Susie [Joe's wife] by suing her. But would you be surprised if her dad hired the best lawyer that he could find to defend that lawsuit? The alternative would be to sit down at the kitchen table, ask her to forgive you for your need to be with the 25-year-old, and see if you could come to a fair agreement regarding the children, the house, etc. Then go to a mediator to work out the details and finalize something legal. Your friend is complaining that he is embroiled in litigation, but he is the one who started a lawsuit. Of course he is now plagued with litigation. Did he expect his wife not to defend the lawsuit?”
  • Joe: “But he was afraid that she was going to file for divorce herself.”
  • Me: “Well, she didn’t, did she?”
  • Joe: “And his wife is a crazy bitch.”
  • Me: “All the more reason not to sue her. If it doesn’t make sense to go around suing the average person, why would you sue a crazy bitch and then expect things to go well? And if the crazy bitch is also the mother of your child? He should send her an email right now saying ‘I apologize for suing you and I hope that you will forgive me and agree to sit down with me at a divorce mediator’s office to come to an agreement that will be best for our children.’”

(I suggested to my friend that he read the “Divorce Litigation” chapter of our book.)

This is some pretty basic stuff and is required for consumers to read by the State of Florida before they can get a marriage license (handbook), but this married guy with an advanced degree didn’t know any of it. He’s a supporter of gay marriage, as it happens, and after the conversation it occurred to me that he has no clue as to what civil marriage is. I wonder how many other Americans who have weighed in on either side of the gay marriage debate are similarly situated in their ignorance of the fundamentals.

Related:

Cosby: His Life and Times

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One of the more poorly timed authorized biographies, Cosby: His Life and Times, was not in very high demand at the local library. So I decided to learn a bit more about Bill Cosby, other than the sexual assault allegations that have flooded the media since November 2014.

Mark Whitaker’s book is interesting for its window into black-white relations in the 1960s when Bill Cosby was on his way to becoming America’s most successful entertainer. Were whites racist? The business executives running television networks were happy to employ talented actors of all races, according to the author, but sometimes they expressed fears that affiliate stations in the Deep South would not run shows featuring a black co-star. Their fears that “the other people are racist” turned out to be unfounded, with 180 out of 184 affiliates picking up the supposedly controversial shows. This is not to say that network executives are completely open-minded. They fought like tigers against Cosby’s plan to fill five minutes of one of his 1980s sitcom episodes with lines from Shakespeare’s Julius Caesar, believing that Americans could not accept the Bard in their living rooms.

The author, a former managing editor of CNN and bureau chief for NBC News, is criticized for his failure to include anything about allegations of sexual assault against Cosby. This Wikipedia page from September 6, 2014 does include an account of a 2004-6 case and as many as 13 other women with similar claims:

In August 2006, Cosby reached an out-of-court settlement in a lawsuit filed against him by a Canadian woman claiming he had attacked her in his Philadelphia home in 2004. The woman claimed she had been sexually assaulted after being given pills when she had complained of feeling stressed, and court documents show her lawyers intended to call 13 other witnesses who made similar claims of abuse. Cosby denied the assertions.

Thus it may be said that Wikipedia is a more balanced source than this $30 Simon and Schuster book.

Given our current public debates about optimum tax rates on our most successful citizens, the book is relevant for its portrayal of what Cosby did when he was earning a very high income in an environment of high tax rates. He frantically invested the money into film and recording projects, which qualified as deductible business expenses, to avoid giving 70 percent to the federal government. This ended up creating a huge personal loss for Cosby, as the projects did not pay off, but also a loss to the economy, as a lot of useless showbiz people in LA snorted up what would have been the U.S. Treasury’s money.

The book reminds readers how influential network television was back then. It was possible to get at least one member in nearly every American family to watch the same TV show on the same night. Cosby used this platform to put out a positive image of middle class black America.

The book is not without embarrassing disclosures. Whitaker describes a dalliance with a young lady in Los Angeles (Cosby was there for extended periods for work while the family remained in Western Massachusetts). Shawn Berkes turned up to meet Cosby in Las Vegas in 1975 with a photo of a 14-month-old baby girl and a hunger for cash. This was prior to the introduction of child support guidelines so the value of a pregnancy or child that resulted from a brief encounter was hard to calculate. Most of the cash value of an out-of-wedlock child was due to the potential for embarrassment, marital discord, and bad publicity. (A present-day successor to Ms. Berkes could have sex in Los Angeles with a high-income partner and then use the online California child support calculator to learn exactly how much the resulting child would yield. Note that she would be very unwise to have sex or a child in Las Vegas due to Nevada’s $13,000-per-year cap on child support for a single child.) The incident shows the price of celebrity in the U.S. because there was never any evidence that the child was Cosby’s.

The book reminds us that Cosby’s beloved son Ennis was murdered more or less randomly and pointlessly by an armed robber. It is tough to imagine how a parent could recover from that and go on trying to entertain the rest of us.

Whitaker also describes Cosby’s late-life jeremiads against black ghetto culture (e.g., the Pound Cake speech). Our interviews with divorce litigators nationwide and review of the research indicates that Cosby’s attack on black culture is unfair to at least some extent. Do black women have children in response to cash incentives provided by the U.S. welfare system? Perhaps, but the data show that white women also have babies to get cash. See “Parental Responses to Child Support Obligations” (Rossin-Slater and Wust 2014) in which Danish women, presumably overwhelmingly white, were more likely to have an out-of-wedlock child if they had previously received a cash profit on an earlier child. The change in behavior was significant despite the small size of the cash incentives (child support is capped at $8,000 per year in Denmark, lower than the value of welfare benefits, such as free housing, here in the U.S.). Child labor in the old days was mostly a white phenomenon. From our book:

A key assumption underlying most states’ divorce system is that a parent would never put personal financial gain ahead of his or her child’s interest. For example, a parent who believed that 50/50 shared parenting would be better for a child emotionally would not go to court asking for 67/33 or 100/0 in order to have more money.

“You know that this assumption is false,” said one litigator, “because 19th century parents sent their children to work in the mills and stopped only when child labor laws made it illegal.”

It turns out that this question has been formally studied by economists. See, for example, “Parental Altruism and Self-Interest: Child Labor Among Late Nineteenth-Century American Families” (Parsons and Goldin 1989; Economic Inquiry 27:4):

Nonaltruistic behavior by parents was pervasive. Even among families with positive assets, child labor was common…

The labor market evidence suggests that parents were willing to accept large reductions in their own wages to secure employment in areas having abundant child labor opportunities. They were implicitly willing to sell the labor services of their children very cheaply, indeed at a rate that suggest they placed very little value on the foregone schooling (and future income) of their children. … Neither did they permit children to retain their earnings for future use. The children were simply worse off…

The empirical results suggest that parents did not have strong (economic) altruistic concerns for their children. … the family provided little in the way of offsetting physical asset transfers (in the form of gifts and bequests) to compensate children for their lost schooling and future earnings. The increased family income was apparently absorbed in higher current family consumption.

Do black men run away from fatherhood? Lawyers and legislators that we interviewed told us that fatherhood for a lot of black men means being the only non-lawyer in a courtroom and being on the losing end of whatever the proceeding might be. One attorney said “white men spend all of their savings defending divorce lawsuits expecting to get justice; black men don’t bother because they know that they’re not going to be treated justly.” Regarding continuing to pay a lawyer and defend a lawsuit after losing a 10-minute “temporary order” motion in which custody of children are assigned to the mother:

“Realistically this is where one parent, typically the father, should give up,” said one attorney, “due to the court system’s bias toward the status quo, even a status quo that was created by the court. The judge has told the father ‘The only thing that you’re good for is paying the mother’s bills’ but dad has trouble believing that he’ll never be anything other than an ATM. In a lot of ways the ghetto dads are smarter than my [white] male clients. Ghetto dads try to minimize the financial damage, comply with court orders to pay money, but don’t volunteer to serve as unpaid babysitters of a child that the court has deemed to be essentially someone else’s.”

Cosby does not seem to account for the possibility that American blacks are responding to economic incentives in more or less the same way as American whites, but from a different educational basis.

What about the fact that the 500 pages of the book teach us less about the accusations of sexual assault against Cosby than does a casual visit to Wikipedia? To my mind that means we can’t accept this book as a definitive guide to Bill Cosby as a human being, but the book remains a definitive guide to his professional accomplishments.

Cosby was undeniably one of the most important and influential Americans of the 20th century and Whitaker does a great job of explaining that importance, albeit with some name-heavy sections that people who aren’t passionate about Hollywood would want to skim. For Americans who pat themselves on the back today for not being as racist as those white folks depicted in movies such as Selma, the book also serves as a reminder that the supposedly deeply racist America of the 1960s and 1970s was very happy to work with or be entertained by a talented black person. (This is not to say that we don’t have any race-related problems or didn’t have any back then, only that things are perhaps not so different.)

More: Read Cosby: His Life and Times.

Stanford studies tendency of people who vacation together in Italy to have sex

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Mental challenge for today: A rich 29-year-old guy invites a 21-year-old fashion model and college undergraduate to go on an all-expenses paid vacation with him to Italy where they will be sharing a luxury hotel room. She accepts the invitation. Are they likely to have sex?

This question is being investigated by the 10 lb. heads of Stanford University, with the help of one of the world’s most expensive law firms, Pillsbury (disclosure: I have served as an expert witness in Delaware Chancery Court for a Pillsbury client; Pillsbury won the case so apparently they are worth whatever they’re charging).

This question also merits an epic-length New York Times magazine article.

What do readers think? Can a society survive when some of its best educated people are occupied with this kind of investigation? What does it mean when the editors of a major newspaper think that this is newsworthy?

My idea for Stanford’s next research inquiry: Do visitors to Las Vegas tend to drink and gamble?

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