Diversity and Participation

Kevin Drum writes:

Do Americans hate welfare because they think all the money goes to blacks? Alberto Alesina and Edward Glaeser don't put it quite that baldly, but that's their basic thesis. Robert Tagorda says this argument is "a bit hard to swallow" but quotes a couple of other economists who say there's something to it:

Over the last five years, at least 15 different empirical economic papers have studied the consequences of community heterogeneity, and all of these studies have the same punch line: heterogeneity reduces civic engagement. In more diverse communities, people participate less as measured by how they allocate their time, their money, their voting, and their willingness to take risks to help others.

I looked at a similar question when I was doing my research on employee involvement in corporate governance. In my articles, Privately Ordered Participatory Management: An Organizational Failures Analysis and Participatory Management within a Theory of the Firm, I discussed studies finding that workforce demographics are correlated with the effectiveness of participatory management - the more homogeneous the workplace, the more successful such programs proved. One important study found that activist employees, defined as those most likely to seek an active role in participatory management, tended to be white males who were younger, more politically active, and better educated than their peers. They also tended to be far more ambitious than their peers, while simultaneously being less tractable to supervision. On the other hand, I also identified studies finding that management demographics are relevant, finding that female managers tend to provide more frequent opportunities for employee involvement than male managers.

Why might diversity and participation be at odds? At least in the workplace, participation seems to be correlated with trust among workers and between workers and managers. I explored this link in my article Corporate Decisionmaking and the Moral Rights of Employees: Participatory Management and Natural Law, which recounted evidence that:

Trust is essentially social and normative, rather than individual and calculative. It arises out of a set of shared background assumptions and norms. As Fukuyama himself acknowledges, trust thus derives from shared values and, accordingly, is most likely to arise in homogeneous groups. ... According to Donald McCloskey, for example, the importance of trust to market exchange explains why members of the same ethnic group can deal so profitably with one another.

I then explained that:

Under modern working conditions, workers and senior managers can hardly be described as close knit. In particular, two factors seem especially significant with respect to the erosion of trust in U.S. workplaces: diversity and the loss of shared values formerly held by both managers and workers. As to the former, U.S. workers are required to function in increasingly diverse work forces. Without intending to get into the current public policy debate over diversity, I note that the importance of ethnic and similar ties to the development of trust within a group has demonstrable consequences for the viability of participatory management in a diverse workplace. Even within communitarian societies, egalitarian relationships are often limited to homogeneous cultural groups. In heterogeneous groups, mandated due process rights tend to substitute for spontaneous and genuine trust. This conclusion is supported by empirical evidence that worker participation in corporate decisionmaking is most effective in homogeneous work forces. The success of the well-known worker cooperatives at Mondragon in Spain, for example, is attributed to the ethnic and cultural homogeneity of the Basque workforce. Consider also the observation that many Japanese-owned U.S. manufacturing firms, “particularly in electronics, have adopted very few Japanese production methods. Rather, they utilize paternalistic and low-wage employment strategies with little evidence if any sophisticated work practices.” Practices found in the homogenous Japanese society apparently have not been transplanted to the more diverse U.S. workplace.

Reasonable people can disagree as to the relative merits of diversity and participation, but there is a lot of evidence that one must choose between them. As Robert Tagorda concludes, we need to debate these issues honestly. Perhaps there are ways of promoting participation in a diverse society, but we won't know if we continue to sweep these issues under the rug. One avenue of exploration, for example, is whether the one-time American ideal of cultural assimilation promotes participation by allowing cultural homogeneity to trump ethnic heterogeneity.