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It seems that anyone on Planet Earth with a pulse now is familiar with the situation at Google in which a male engineer sent a 10-page memo over the company’s internal listserv in which he questioned some of Google’s “diversity” policies. As most of us expected when the story became public, Google fired the employee, citing “incorrect” thoughts about “gender” as its justification.

Not surprisingly, we have seen people on both the Right and the Left shooting missives at each other via social media and the usual journalistic outlets. From the left, not surprisingly, the engineer who wrote the memo, James Daramore, is a slimy bigot who got what was coming to him. Conservatives see Daramore’s memo as being reasonable, but that Google is so Politically-Correct that even a slight deviation from the path of leftist orthodoxy cannot be tolerated. Even some people who consider themselves to be politically and socially liberal are critical of Google’s decision to fire Daramore.

We like to think of modern high-technology firms in the famed Silicon Valley such as Google, Apple, and Twitter as representing much that is good about our present day. These companies are full of young, hard-working people who are near-genius in their capacity to understand technology and how it can be used entrepreneurially. As I see it, one of the reasons that federal economic policies (not to mention the predations of the Federal Reserve System) have not created mass destruction of the economy has been the presence of tech-savvy entrepreneurs that continue to foil even the best (or, more appropriately, worst) efforts of politicians and regulators to block economic progress.

Furthermore, we know throughout history that private enterprise often undermines things like racism and sexism (despite the claims from socialists that capitalism is the source of All Bad Things) and that private property, prices, and free exchanges have tied people together that keep politicians from successfully tearing things apart. As economists like Thomas Sowell have noted, it has been governments that have prevented the free association of people who seek to engage in market behavior to better their lives.

For example, Jim Crow policies did not arise out of businesses demanding discrimination against blacks. Economic historians such as Jennifer Roback Morse have noted that the private bus and rail companies opposed Jim Crow laws that segregated city buses, and businesses in general resisted racial discrimination, but were brought to heel by city councils and state and federal legislators.

Jim Crow is long gone, but it seems that Progressives (which gave us Jim Crow in the first place) now are imposing what essentially is a new form of segregation, that being ideological and religious segregation that is more reminiscent of how the former USSR treated dissidents than anything we have seen in private enterprise. For example, I know a young Christian couple in San Francisco, and the woman works at Twitter, where the company leadership has made it clear that it does not tolerate deviation from Political Correctness. She has said that she has to keep her faith hidden, since if others find out her beliefs, she likely would lose her job at worst and be subject to harassment at the very least, not to mention that she could expect no promotions or pay raises in the future. The new “diversity” standards of Silicon Valley seem to want a “diversity” in which everyone doesn’t have the same racial or sexual characteristics, but manages to think in lockstep.

So far, it does not seem that companies like Google are paying much of a price for their Soviet-style enforcement against what only can be “thought crimes.” True, after political conservatives boycotted Starbucks following the declaration from its (now former) CEO that political conservatives were not welcome at the company’s coffee shops, the Starbucks stock price fell and the boycott did seem to hurt the firm’s bottom line. Firms like Google, Twitter, and Apple, however, are so large and so dominant that it is doubtful any boycott would succeed in affecting them.

Libertarians believe that Google, as a private firm, should be able to set its own work policies, including the employment of religious and political discrimination. Indeed, there is no such thing as a “pure” meritocracy in which the most talented are always employed in their best positions. Real life is messier and we should not be surprised (or even upset) when factors other than pure talent are used in part to determine employment decisions.

For all of its expenditures on creating a “diverse” workplace, Google’s staff of mostly white males reflects overall what one might expect in a business that hires math and physics majors by the handful. But, given that at least one Google manager admitted (proudly) that he keeps what he calls a “blacklist” of employees that have uttered un-PC comments, thus making them unfit for working on his “team,” it is safe to say that anyone who might dissent from PC orthodoxy, should he keep his job, might be given a job sorting paper clips.

Google Can Choose: Profits or Policing Thoughtcrimes

Here is where it becomes interesting. Google is a profit-making entity; its stock is sold publicly and its stockholders expect a return on their investment. Yet, with its “blacklists” and in its drive to increase efforts to attain a better state of “diversity,” Google’s management is acting more like government bureaucrats than people seeking to make their company more profitable. This state of affairs might seem contradictory, but Ludwig von Mises more than 70 years ago explained why we observe managers of private enterprise act like bureaucrats. In his 1944 book Bureaucracy he writes:

No private enterprise will ever fall prey to bureaucratic methods of management if it is operated with the sole aim of making profit. It has already been pointed out that under the profit motive every industrial aggregate, no matter how big it may be, is in a position to organize its whole business and each part of it in such a way that the spirit of capitalist acquisitiveness permeates it from top to bottom. But ours is an age of a general attack on the profit motive. Public opinion condemns it as highly immoral and extremely detrimental to the commonweal. Political parties, and governments are anxious to remove it and to put in its place what they call the "service" point of view and what is in fact bureaucratic management.

Mises added: “…the general tendency of our time is to let the government interfere with private business. And this interference in many instances forces upon the private enterprise bureaucratic management.”

Thus, we ask whether or not the continued obsession with “diversity” and all of the enforcement of the PC codes will cut into Google’s viability as a profit-making firm, or if Google’s efforts actually will make the company stronger (as its current management insists). Is this, as the advocates of the Silicon Valley “diversity” claim, simply “good business” practice, or will it undermine the long-term efficiency of these firms, adding unnecessary costs, creating workplace strife, and ultimately resulting in disaster?

Mises would say the latter. Bureaucratic management – and Silicon Valley firms are beginning to reek of it – stands in the way of the very kind of innovation and entrepreneurship that has made these firms powerful and profitable. Firms cannot have blacklists and managers prowling emails and listserves to ferret out any un-PC thoughts held by “rogue” employees, but then expect to be dynamic and profitable for very long. Mises writes:

Nothing could be more nonsensical than to hold the bureaucrat up in this way as a model for the entrepreneur. The bureaucrat is not free to aim at improvement. He is bound to obey rules and regulations established by a superior body. He has no right to embark upon innovations if his superiors do not approve of them. His duty and his virtue is to be obedient.

It is more than just promoting what would be a culture of fear. Google spends more than $100 million a year on “diversity” issues, yet there is a reason that the company’s demographic makeup does not mirror that of the USA, and it isn’t due to misogyny or racism. The problem is that the managers at Google and in Silicon Valley have come to believe that appeasing modern Social Justice Warriors is more important than growing their firms and being profitable. In the end, these firms will have neither profits nor social justice.