The cheating hearts of the patriarchal cartel.

Following up on yesterday’s post, it is entirely possible that the employers of the patriarchy:

1. Were legally permitted to discriminate against women.
2. Were socially encouraged to do so.
3. Stated that they were paying men more than they paid women for the same work.
4. Intended to discriminate against women (believing this to be good for society).
5. Believed they were paying women less than men for the same work.
6. Were not actually paying women less than men for the same work.

How can 1-5 be true, and #6 also be true?  To understand this, you need to consider the mechanism an aspiring woman-shackling patriarch has to use in order to create a society where men are systemically paid more than women for the same value of work.  This is very similar to a cartel of producers which agrees to collude to limit production to increase prices.  In this case however, the cartel is of consumers (of labor) who agree to collude to overpay for the labor of men for the good of society.

The problem every cartel faces is while the members collectively agree that the plans of the cartel are for the good of the group, individually there is always a temptation to cheat.  OPEC’s members may come to agreement on a quota to restrict supply, but individual countries have an incentive to produce more than their agreed quota in order to maximize their own revenue and profit.

In order to overcome the problem of cheating, cartels need to be able to easily spot cheating and they need an effective mechanism to punish it.  Without the ability to effectively detect and punish cheating, cartels tend to drift into irrelevancy as each member loudly extols the virtues of the pact while quietly acting in their own best interests.  This explains how 1-3, and  even #4 could be true while item 6 was also true.  Each employer has the incentive to claim they are following the agreement of the cartel, and when they came to the agreement they may have originally intended to honor it.

Bullet 5 (they believed they were paying women less) requires a bit of explanation about labor as an input into production.  It is very difficult to pin down exactly what any given person’s labor is worth.  Years of schooling or experience don’t always predict productivity and quality.  Additionally in order to determine the value of a person’s labor often it isn’t a simple matter of how much an employee will produce and the quality of their product in the next period.  Other factors come into play like how the employee influences the team, their hours of availability, and how long they stick around after the employer experiences the sunk cost of hiring and training them.  We would expect an individual employer to struggle quite a bit to get this exactly right with each individual employee.  However, in the absence of an effective cartel we would expect employers in general to get this at least fairly close to right with the available labor pool over the longer term.

Note that once discrimination was outlawed it became illegal for employers to publicly demonstrate to their fellow cartel members that they were holding the line.  Any proof that they were choosing to pay men more would be grounds for legal action.  Additionally, any previous forms of social pressure applied to cheating firms were now impossible.  The change in the law made it impossible to both detect cheating and to punish it.  Any traction the cartel had previously gained would now be impossible.

Based on the fact that in the 17 years following the change in labor laws women’s relative earnings remained flat, it appears that the labor market in general was already extremely close to what was in the best interest of the employers.  It wasn’t until feminists could make longer term changes to our culture (and therefore the choices of women) and implement muscular affirmative action that we started to see a real move in the relative earnings of women.  From the feminist perspective changing the law may have been a prerequisite for the other changes they eventually made, but by itself it did nothing to close the wage gap.

This had to have been incredibly frustrating for feminists at the time, and as it turns out they had the cheating men of the patriarchy to blame.  The woman-shackling patriarchs may well have thought they were keeping the wages of men artificially high, but their actions after the legislature and the courts broke any possible cohesion of the cartel strongly suggests they were in fact failing to do so.

See also:  Sex Cartel!