Mark Cuban’s DEI Question-Begging
Mark Cuban’s DEI Question-Begging
Will the billionaire Mavs owner agree to a debate?
Earlier this month, The American Conservative published “DEI Was Never About Profitability,” in which I refuted Mark Cuban’s crusade to convince the public that companies hiring board members based on gender and ethnicity is a profitable endeavor. He leans on McKinsey studies “proving” that DEI is profitable, while I tout a new academic study from Jeremiah Green, an accounting professor at Texas A&M, and John Hand, an accounting professor at the University of North Carolina Chapel Hill, debunking those McKinsey studies. Cuban replied to me to defend himself.
He first questioned my sincerity: “You are banking on the fact that no one read the survey you referenced. Aren’t you?” I wanted readers to read the study, which is why I prominently linked to it. The study was precisely as I portrayed it; I did not twist, distort, or misquote it.
“They [Green and Hand] had to reverse engineer the survey,” Cuban continued. “McKinsey didn’t provide their data.”
This shows a basic misunderstanding of Green and Hand’s study. Replication is not reverse engineering. (It’s ironic that he uses this “reverse engineering” terminology, as this is likely what McKinsey did—they had a result they wanted to show and seem to have reverse-engineered their data to show it.)
“They found, in the actual data, that the SP 500 firms (in 2019) that ranked the highest in diversity, outperformed the lowest quartile,” Cuban writes. This doesn’t mean that DEI leads to profitable companies, it simply means that profitable companies have tended to practice DEI. The causal link is unsubstantiated; it remains unclear and unproven that wokeness is boosting bottom lines.
“What they concluded was that a random big company using the McKinsey approach wouldn’t get the results McKinsey suggests,” Cuban said. This is precisely the point. There is no effect of skin color on performance, and a random company that increases racial diversity would not get the performance uplift McKinsey claims.
Cuban’s follow-up comment is revealing: “The reality is that it’s useless research.” It appears that, since McKinsey’s research confirms his worldview was useful to Cuban, it is useful; research challenging his worldview is useless, even when it uses the same methodology.
“All the companies in the SP 500 that they used back in 2019 have the resources to decide for themselves if DEI works for them,” he continued. “And those outside of the [SP500] aren’t going to base their diversity decisions on this survey.” As alluded to above, the fact that every big company is woke doesn’t prove anything beyond that they’re feeling the pressure to conform. This pressure often comes in the form of financial coercion—the CEO of BlackRock, for example, has admitted that his company actively “forces behaviors” on DEI.
It is also false that McKinsey’s findings are used only at large companies. In fact, they have been applied widely in small and mid-size firms all over the world. For example, here is promotional literature from Jupiter Asset Management bragging about research showing that “DEI correlates directly with business performance.” Moreover, McKinsey’s flawed research had significant influence well beyond the realm of corporate affairs. At least two different sources in the Navy and at least one source in the Department of Defense explicitly cited the debunked McKinsey studies as justification for spending $270 million on DEI initiatives between 2022 and 2024.
In response to an emailed request for comment, Cuban wrote, “Thanks for the comical article. We can agree on what the data does or doesn’t mean. That’s fair. We can disagree on the impact of DEI. But your personal attacks tell me the level of respect you have for your audience.” (We’ll let the readers decide whether the tone was over the line.) “And your consideration of Elon’s reference to the composition of the Mavs is pretty funny. The number one rule of corporate DEI is hire the most qualified person, or in case of an NBA team, player. It’s amazing to me how difficult a concept that is for some people.”
Actually, the number one rule of corporate DEI is to hit targets and quotas; that is what makes it different from traditional hiring practices. Hiring the most qualified person is just meritocracy, not DEI. It appears that there is a contradiction in how Cuban treats companies and how he treats the NBA, where he refuses to hire any female, Asian, disabled, transgender, or two-spirit athletes, as Elon Musk points out.
Cuban has been arguing in circles about DEI and profitability for months on end on X, including at great length with the Manhattan Institute’s Chris Rufo, who has challenged him to a debate on this issue. Rufo has expressed his continued willingness:
I am eager to continue my debate with Mark Cuban on DEI and profitability, and I welcome the opportunity to do so under the auspices of The American Conservative. I respect Mark’s candor and willingness to engage; hopefully, he accepts the invitation to defend his ideas.
The American Conservative hereby extends an invitation to host and moderate the Rufo vs. Cuban debate, whether in person or virtually. We look forward to facilitating a rigorous exchange of ideas on the topic of DEI and profitability.
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