“Go Woke, Go Broke!”
Diversity Training, The Anti-Woke, and the Collapse of Silicon Valley Bank
Silicon Valley Bank went from being one of the most highly esteemed banks in the United States to being seized by the federal government seemingly overnight, making markets extremely volatile as many investors worry about people losing confidence in the banking sector, creating a domino effect that could lead to a financial collapse similar to 2008, and likewise a similar outcome that still haunts peoples’ minds.
Though many experts believe that the institution collapsed due to a variety of reasons stemming from rapidly rising interest rates, lousy fiscal management, and over-valuing the tech sector, some political commentators have posited that Silicon Valley Bank’s failure can be largely accredited to one source: Going Woke.
For the last couple of years, there has been a growing concern about ‘wokeness’ spreading throughout the country and the world at large. However, finding a universal definition for wokeness isn’t simple, and the answer changes depending on who you ask. To some, wokeness is a relatively positive thing, and it can imply that you fight for equality, justice, and equal opportunities for oppressed groups of people. Others see it as a hateful ideology that looks to prohibit heterosexual white men from succeeding in society, all in the name of diversity and equity. These critics of wokeness often believe that there is a subversive agenda to make this group of people feel guilty about their identity, and some even go as far as saying wokeness promotes renouncing these parts of yourself entirely.
This narrative around wokeness has created controversy over different policies and programs that are becoming more widespread. Many companies, universities, and other organizations now provide diversity training, which seeks to educate employees on how to respect different cultures and understand our internal biases that affect how we treat people of different backgrounds than us.
Some organizations have implemented policies to promote equality in the workplace, such as affirmative action, which looks to create a more equitable hiring process by having a diverse set of members overlook applicants to dampen implicit biases one may have when reviewing candidates. These types of programs have fallen under harsh criticism from the ‘Anti-Woke’ if you will, claiming that companies are no longer hiring the “best person for the job,” but rather prioritizing how the company looks over the quality of its services. However, it should be noted that research has shown that minority applicants with the same qualifications as white applicants have a statistically harder time being accepted for a new job, which many proponents of affirmative action source as being a prime reason why the policy should be implemented.
This same criticism is now being applied to the latest news about Silicon Valley Bank, and these diversity programs have been blamed for being the central reason the company failed. Like many organizations in the modern era, Silicon Valley Bank had multiple Employee Resource Groups (ERGs) that promote diversity in the workforce and equal opportunities for all. Critics believe Silicon Valley Bank was focusing too much on social issues instead of increasing profit margins, which led to its collapse.
Indeed, diversity programs are usually not directly profitable to companies compared to other initiatives they may invest in, such as high-skill job training. But these programs aren’t meant for this, rather they are meant to attract customers (and employees) by highlighting their commitments to equality in the workplace and society as a whole.
How much corporate executives — including the ones at Silicon Valley Bank — care about these initiatives (or any of their employees for that matter) is up to debate. Sure, it is true that in today’s political climate, it is becoming increasingly trendy to be an ally, and companies take advantage of this. But is it the sole reason why Silicon Valley Bank collapsed? Furthermore, why is it even being blamed in the first place?
Given how recent Silicon Valley Bank’s collapse has been, experts caution that a detailed report outlining why the bank failed will take months to assess, however, that hasn’t stopped some from giving their speculation. Silicon Valley Bank was in a unique position because it was known for providing capital to many tech start-ups, which meant that a lot of its clientele were informed investors who watched the market sharply. Before its failure, Silicon Valley Bank did not struggle with funding, but due to rising interest rates, the company decided to sell its hold of U.S. Bonds.
Before the COVID-19 pandemic, U.S. interest rates had been near-zero, the cheapest they had ever been in the nation’s history. However, after trillions of dollars of government spending, the supply chain breaking down, Russia’s Invasion of Ukraine, and other natural disasters, inflation started to skyrocket on a global level. The Federal Reserve decided to raise interest rates to mitigate inflation, hopefully bringing the economy back to normalcy. This created a new problem for many companies who bought U.S. bonds when they were insanely cheap on a “hold-to-maturity” basis, which is when investors buy securities until their principal and interest have been paid off.
Silicon Valley Bank took advantage of cheap credit before the pandemic, but with rising interest rates the bank was forced to sell their share of bonds at a net loss, which set the conditions for the storm that was about to brew. Investors became skeptical about their investments in the company, which eventually led to a run on the bank.
Experts also claim that the company grossly mismanaged its situation, saying that management failed to reassure their investors that everything was going fine by not properly communicating their situation, or by not releasing their convertible preferred stock, an alternative fundraising initiative, sooner. So what about the diversity training? Well, not many experts hold stock (no pun intended) in the notion that this largely contributed to the bank’s failure, so what’s all the concern about?
We live in a very volatile and chaotic world in the 21st century, and as globalization continues to spread across the world, we are more reliant on international institutions and organizations to uplift the global economy, which means that just one catastrophe halfway across the world can have a profound effect on people everywhere. As the planet becomes increasingly fragile, and our economic system doesn’t always look out for the best interests of the general public, it’s easy to point our fingers at a scapegoat for our problems.
The collapse of Silicon Valley Bank will have profound impacts in the coming weeks, and we still aren’t exactly sure what will come of it. Companies who relied on investments from the bank are expected to feel the first punch, but will other financial institutions follow the same path? Right now, it is uncertain, and the Federal Reserve will have to assess Silicon Valley Bank’s situation to properly understand how their monetary policy is impacting the economy overall.
Meanwhile, many influencers are calling for banning diversity training and equity initiatives in the name of “saving the economy,” but listeners should be skeptical of these claims. If diversity training, climate initiatives, or any other social program was the main result of Silicon Valley Bank’s failure, why haven’t other companies from non-related sectors who also have these standards failed as well? Surely, if the Anti-Woke had legitimacy to their claims, there would be clear evidence that companies that hold diversity training have significantly lower profit margins than ones that don’t, but that simply isn’t the case. It’s always easy to blame a boogeyman for societal flaws, though that doesn’t make the claims true. We live in tough times, and only by searching for the truth, whatever that may be, can we improve our world.
Life is short, be happy.
