The Women's Agenda
A Strong, Free, Capitalist Economy Creates the Best Opportunities for Women
APRIL 01, 1994 by DEBORAH WALKER
Filed Under : Free Markets, Entrepreneurship
Dr. Walker is Associate Professor of Economics at Loyola University in New Orleans.
I am often asked, “What is this ‘woman thing’ about anyway?” or, “Why is there a woman’s movement or a feminist agenda at all?” Both men and women have their own ideas about this social movement and what they want to see come out of it.
Although I speak only for myself, I hope I convey the thoughts of many when I say that generally women are asking for three things: (1) equality under the law, (2) more options in society: that is, opportunities to expand the roles they play in society, and (3) as much respect and recognition as men have in those roles, while maintaining respect in the traditional roles as well.
A truly free society based upon classical liberal principles certainly should provide women with legal equality. Unfortunately, the woman’s movement now goes beyond this and asks for special privileges under the law. In my opinion, this is wrong. If women want to live in a free society offering economic freedom, then they must realize that with freedom comes responsibility, and that respect and recognition must be earned. These cannot be given to anyone, especially by government.
Before I continue, let me make three general statements upon which the rest of my analysis will rely:
(1) Good economic analysis is sex-and-gender neutral. Both men and women act purposefully.
(2) Entrepreneurs go into business to make money! This is not only noble and honorable, it is also socially responsible. Adam Smith was right: Responsibly acting in one’s own self-interest will benefit others.
(3) Economic freedom, indeed freedom in general, is a desirable goal in and of itself. Economic freedom may also have desirable consequences, but it is valuable for its own sake. Those of us who value freedom always seem to be forced to argue that the outcome of freedom is better than the outcome of government intervention. This is unfortunate since no one ever knows the particular outcomes of choices made in a free economy. It is doubly unfortunate because the question of whether freedom itself is desirable is lost in the debate. It is not even asked!
The Business of Business
Many people, most academic feminists among them, seem to have forgotten that the goal, the bottom line, of business is to make money—something often regarded as evil and unethical. Instead, businesses supposedly exist to employ people. Furthermore, businesses are supposed to employ people they do not want to employ and to pay them wages they do not want to pay. Businesses are also supposed to exist to pay for everyone’s health care, or provide child care, or make sure everyone is taken care of in retirement. With regard to women especially, businesses are considered social institutions designed to accommodate pregnancies or other family concerns. This attitude toward business is detrimental to women. Women, in particular, should applaud the motive of making money, which drives a free market economy.
Under free markets, the basic economic questions of what and how things are produced, and who gets what, are decided through a process of competition for monetary profit. I produce something and I sell it to consumers. If consumers like it—more importantly, if a lot of consumers like it—I make a lot of money. You notice this and decide you want a piece of my pie. You start competing with me. Resources are moved out of unprofitable activities and into profitable ones. Prices, and the profits that emerge from them, are the all important information signals which guide the movement of those resources. And, yes, it is all based on the Almighty Dollar!
Oh, what a heartless, cold system. Certainly not a system that women would have devised. After all, women are the nurturing sex, the great civilizers of society. Capitalism must be a man-made ruthless system that operates to keep women in their place and elite capitalists in power.
Woman’s Best Friend
Is this true? Can women, having a different, more civilized mindset than men, come up with a better system? I challenge anyone to try. But in the meantime, let me say that I think capitalism is not a heartless or ruthless system, but just the opposite. Furthermore, capitalism, and the economic freedom upon which it is based, is every woman’s best friend (for the same reasons it is every man’s best friend). And this is true for any woman, regardless of her aspirations.
Why? Look around the world, countries without economic freedom and markets are countries where people starve to death on a daily basis, where children die of disease before they have a chance to form their own identities, where people’s lives are preoccupied by the business of trying to stay alive. Capitalism feeds people, keeps them healthy, provides them with leisure time to play catch with their kids and have romantic picnics with loved ones. It is the most humane and socially just system known to men and to women.
How exactly does economic freedom enter the picture? Economic freedom and capitalism provide the opportunities women need in order to broaden the roles they play in society and to gain the respect and recognition they desire.
In order to understand the fundamental way that economic freedom and capitalism create opportunities we have to return to something I stressed earlier—that basic economic lessons apply to both men and women. A strong and prosperous economy is the only environment in which people can broaden their roles in the ways they desire. Certainly a central planner can force all women into the factories, for example, and broaden their roles in society (this is what both Lenin and Stalin did). But that is not what I am talking about. An opportunity is something that is seen as something desirable by an individual. Opportunities cannot be mandated because mandates can never be flexible enough to meet the needs of a diverse society.
There are many ways a strong economy creates opportunities, but let me begin with the most basic, yet perhaps most important: job creation. Let us quickly dispel the myth that governments can create jobs. They cannot. A government can move jobs around (and in the process destroy a great many of them) but it cannot create jobs. Job opportunities, which are important because they allow women options in choosing an employer, are created when idle resources become productive resources, or when productive resources become even more productive. Efficiency creates opportunities. Efficiency is enhanced in environments where it is rewarded, i.e., under capitalism. This is why I said women should be glad entrepreneurs go into business to make money. In the process of doing so, they create opportunities! Thus, efficiency is a good thing. When women ask for special privileges and special consideration which decrease the efficiency of a firm, they are not only hurting their employer, they could be hurting themselves, or another woman (or man) looking for a job.
Does this mean that businesses should never offer family leave or child care or flex-time? No, not at all. In fact businesses have developed creative ways to keep female employees happy and efficient. But decisions regarding employee benefits must be left to individual firms and not mandated by government. Government does not possess the knowledge necessary to implement programs that will satisfy all businesses and their diverse workforces. Not only do government mandates decrease efficiency, and therefore opportunities, but they also decrease the flexibility employers and employees need to develop programs that will accommodate employee needs while also keeping the workplace efficient.
Free Market Benefits
Here are some examples of what companies are offering without government mandates: (1) support for child care (and elderly care), (2) job-protected leave for childbirth, (3) work at home opportunities, (4) job sharing opportunities, (5) flex-time, including compressed work weeks and coming to work early or late, (6) part-time work, (7) resource and referral services to help employees find child care, (8) pre-tax set-asides which employees can use to pay for child care, (9) sick-child days, (10) disability, which sometimes includes paid or partially paid leave after childbirth.
Interestingly, as I was researching the origins of such programs, I noted one common theme. The programs usually started as the idea of one or more employees. These employees approached the firm, not in a hostile “Norma Rae” manner, but with a well-developed plan showing how the firm could better accommodate its employees and not lose profitability in the process! This makes sense: only individual employees can know what they need in their lives, and only individual firms know what they can and cannot offer.
Now it may be great that companies are voluntarily offering these benefits. However, it is important to ask if companies are offering them because they are efficiency-enhancing over the long term (and in some cases in the short term as well). Such company benefits are either efficiency-enhancing—they promote economic growth, job creation and employment options—or they are efficiency neutral, but value-enhancing to those involved.
You might reply that companies are not offering these options for reasons of efficiency, but because they are afraid of lawsuits. For example, a woman can sue a company claiming she was not promoted as quickly as others, or was put into a “mommy track” because of her decisions regarding pregnancy and motherhood. To avoid costly lawsuits companies may try to keep women “happy” by offering other options. To the extent this occurs its impact is negative for two reasons: (1) it clearly violates the freedom of contract, which includes the option of not making a contract at all, and (2) it leads to inefficiency which, I repeat, decreases opportunities. In these instances the actions of highly educated professional women who sue or threaten to sue, and thereby impose inefficiencies in the job market, are subsidized by the unemployed, many of them single mothers who cannot find a job at all!
It is also true that a firm may actually choose “inefficiency.” The owners of a firm may have personal preferences for less monetary profit and more employee benefits. Ben and Jerry’s Ice Cream might be a good example of this. I say might be because I am only assuming the company could make more money if it changed its benefits. I do not know. The company is famous for its so-called social-mindedness. It offers two weeks of paid paternity leave and four weeks of paid adoption leave, with extended leave without pay, and three pints of free ice cream per day, among other benefits. When entrepreneurs such as Ben and Jerry freely choose such arrangements, not because of the threat of lawsuits, but because of their personal ideologies, I see no problem except that I am glad most entrepreneurs want to make money, because that is the incentive that creates opportunities. If every business operated for nonpecuniary reasons there would be a few lucky employees and many unlucky, unemployed people!
Free to Choose
It is also important for women that choice remains a priority, allowing firms to offer cafeteria-style benefit programs. Under many of these programs, employees who use particular benefits also pay for them, or bear the brunt of the cost. This is important for reasons of efficiency, for employee morale in general. In some cases this will not be feasible. For instance, a firm may operate an on-site day care center funded by decreasing the money wages of all firm employees. In this case, employees without children subsidize those who use the day care center. But if a childless employee does not like this situation, it is important that he or she can choose to work for another employer.
This is why a strong economy is important. A strong economy, free of government interference, will give people choices. Federal mandates, such as the Family Leave bill, passed last year, are anti-choice in that they force businesses to offer a particular benefit, decreasing choice within companies, and they destroy efficiency, decreasing choice among companies.
Sports Cars and Mini-Vans
Let me be more specific by using an analogy. The employer/employee relationship is a market exchange just like any other market exchange. While it is probably one of the most important exchanges a person makes, it is an exchange nonetheless. In this way employers search for employees, and employees search for employers. When you buy a car you search for the one with the features and options you personally desire. For example, a mini-van is very different from a sports car. Now wouldn’t we all be upset if the government mandated that all single people must buy mini-vans instead of sports cars, or that all sports cars purchased must be equipped with a child seat, which the single person does not want? Just as people want to choose from a variety of vehicles, they also want to choose from a variety of employers. Everything from employers who offer very minimal benefits but very high money wages (for the sports car crowd) to employers who offer paid paternity leave and on-site child care (for the mini-van crowd). A person should be able to choose employers based upon personal lifestyle choices. This does not by any means preclude an employee from negotiating new arrangements or benefits with an existing employer. Employer options can and should change over time just as options on mini-vans and sports cars change over time.
There are two other important ways economic freedom or capitalism opens opportunities for women. First: technology. Capitalism created the technology which changed our economy from one based on physical strength (giving men a comparative advantage in many economic activities) to one where physical strength is no prerequisite for economic success. This alone is reason enough for women to applaud capitalism. But technology has also opened other doors as well. Household technology (created by capitalists) has made work inside the home much less time-consuming and difficult. Microwave ovens, dishwashers, and electric can openers, for example, are all derivatives of a consumer-oriented economy. Furthermore, technology in the telecommunications area allows many people to shop at home and, more important, work at home. We cannot even imagine what opportunities technology will create in the future.
Second: entrepreneurship. Only a free market economy affords women this option, a very important option indeed. The popular statistic often quoted is that women-owned businesses now employ more people than the Fortune 500 companies. That is impressive. The opportunities female entrepreneurs create for others in the process of taking on the responsibility of inventing their own opportunities cannot be overlooked.
Women should also keep in mind that a market economy thrives on differences between people. Take the simple act of trade. Trade takes place because I value something you have more than what I have, and you value what I have more than what you have. If we were clones, with the same set of values, there would be no reason to trade. This is an important point because there are differences between men and women. Instead of trying to destroy or hide those differences, I think we should celebrate them. They are, after all, what makes life interesting. Also, by recognizing our differences, the ways we are special, we can take advantage of those differences through entrepreneurial talents that come naturally to women. Economic freedom allows us the opportunity to discover what these advantages might be, or even if the differences between men and women do indeed matter in the marketplace.
My main message to women is that to receive the respect and recognition you rightly deserve as complete human beings you should have the following agenda: (1) With respect to economic policies, less government involvement in all aspects of the economy, including and especially lower taxes, less regulation, and a drastic decrease in the size of government. These policies will give women a strong, prosperous and free economy which will provide the options they desire. (2) Emphasize your own individual responsibility. If you want your employer to change, then take the responsibility of creating your own strategy for that change. But do not expect your employer to sacrifice profit for your lifestyle choices. Be creative and convince your employer that your strategy is a win/win strategy.
The government, instead of making the world a better place for women, is destroying opportunities and destroying individual liberty. Lysander Spooner, in 1882, put it best when he wrote: “If the women, instead of petitioning to be admitted to a participation in the power of making more laws, will give notice to the present lawmakers that they are going up to the State House, and are going to throw all the existing statute books in the fire, they will do a very sensible thing.”