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Tuesday, March 31, 2015

In Indiana, business is changing the tone of economic development efforts for all states.

Mike Peters, 2008

As business investment losses surge past the $100m mark after less than a week, maybe Eric Doden, president of the Indiana Economic Development Corporation, would have been the man to make lemonade from the sour mess the state legislature and Governor Mike Pence has made of the state's reputation; Doden is a graduate of Hillsdale College, which Princeton Review consistently lists as one of the nation's most gay-unfriendly undergraduate schools and which refuses all federal and state funding rather than comply with affirmative action rules. But Doden, whom Pence appointed to the post in 2013, is leaving in May to spend more time with his family. As things stand, he is getting out just in time.

The hiding Indiana is taking over its new religious discrimination law reflects a reality overlooked by conservatives: the world is changing. Fast. 

Conservatives aren't. At National Review, one NR Corner contributor has an open letter up advising "It's not that hard to survive a hatestorm." Editor Rich Lowry waves off the controversy of the last week as "a perfect storm of hysteria and legal ignorance, supercharged by the particularly censorious self-righteousness of the Left."

Outside, NR's echo chamber, things are changing, and have been for some time.

Indiana isn't being singled out. It's getting pounded for being first out of the box among states whose prevailing political class has been anxious to score some points after last year's shellacking on marriage equality.

But only up to a point: whatever state was first would have gotten the same treatment. Arkansas was a close runner-up passing discrimination laws; their bill is on its way to Governor Asa Hutchinson, who says he will sign it. Threatened by the loss of a Super Bowl (and, perhaps recalling losing the 1993 game after voters refused to adopt the Martin Luther King, Jr. holiday). Arizona's governor vetoed her party's discrimination bill.

Georgia's Republican-controlled legislature has quietly shelved further action on its discrimination bill; North Carolina's governor has asked what the problem is his party's legislators think they will fix with their bills, and has said he will veto whatever- if anything- reaches his desk.

People have lived through the promised apocalypse of gay marriage, and it didn't happen. They hear the increasingly threadbare arguments, shouted more loudly, and find little merit in them.

And they continue shopping. This has become a business issue, because tomorrow's customers are the ones spending the most money. And tomorrow's customers aren't afraid of asking corporations, "Why do you need to discriminate?"

Conservative boycotts have been going on for years- National Organization for Marriage and the American Family Association have been peddling them forever, with virtually no effect. NFL player-turned -evangelical pastor Ken Hutcherson made showy campaigns to bring Microsoft to its knees; Hutcherson is now dead, and Microsoft keeps churning out software products. In 2013 a Starbucks shareholder tried beard Chairman Howard Schultz about a drop in sales, tieing it to the company's gay-rights advocacy, and Schultz politely handed the man his head. Forbes reported the exchange:
“In the first full quarter after this boycott was announced, our sales and our earnings, shall we say politely, were a bit disappointing,” said the shareholder, Tom Strobhar, whom the Huffington Post identifies at the founder of the anti-gay marriage Corporate Morality Action Center. 
Was Schultz taken aback? Not in the least. He responded, “Not every decision is an economic decision. Despite the fact that you recite statistics that are narrow in time, we did provide a 38% shareholder return over the last year. I don’t know how many things you invest in, but I would suspect not many things, companies, products, investments have returned 38% over the last 12 months. Having said that, it is not an economic decision to me. The lens in which we are making that decision is through the lens of our people. We employ over 200,000 people in this company, and we want to embrace diversity. Of all kinds.” 
At that point the audience interrupted in cheers and applause. Then Schultz concluded, “If you feel, respectfully, that you can get a higher return than the 38% you got last year, it’s a free country. You can sell your shares in Starbucks and buy shares in another company. Thank you very much.” More cheers.
Forbes concluded:
Washington Post poll this week found that support for gay marriage among Americans has shot up to 58% in favor and 36% against, a complete turnaround in less than 10 years. Schultz’s stand isn’t nearly as daring as it would have been a few years back, but still, it’s impressive to see a CEO think about more than the bottom line and get cheered by his shareholders for it.
In the LA Times today, business reporter Michael Hiltzik makes the same point two years on:

It’s not unusual for Big Business to follow such a trend, rather than lead it, but the widespread condemnation of SB 101 by business executives (it’s hard to name a single one who supports the law) indicates that they understand the trend is for real, and resisting it is a policy that belongs firmly on the cost side of the ledger. Many of these CEOs aren’t being courageous, exactly, but they are being sensible.
Catherine Rampell at The Washington Post calls this overwhelming public trend toward inclusiveness “heartening” – especially when it comes to economics. Civil rights-era economic theories, like the work of Nobel Prize laureate Gary Becker, held that discrimination could be good for business; if your customers were largely racist, hiring black workers would drive them away. Rampell suggests that argument no longer holds water. In today’s climate, businesses protest discriminatory practices because their customers demand it: “If in Becker’s day firms feared that customers would punish them for inclusiveness, today firms fear customers will instead punish them for exclusiveness.”

U.S. News writer Jill Lawrence says Indiana Republicans have made themselves the hard, cold face of an American version of Saudi Arabia's religious police:


Pence seemed to be arguing his case on ABC in a historical vacuum. It was as if the last 20 years had not happened – 20 years capped by rapid advances such as gay marriage and openly gay soldiers. It was as if 2014 had not happened – a year in which Arizona Gov. Jan Brewer, a conservative Republican, vetoed a similar “religious freedom” bill after an outcry from businesses, advocacy groups and politicians of both parties. It was as if the last few months had not happened – months in which the same collection of interests expressed deep concerns about the prospective Indiana law. 
Unless you had a mind to compete in conservative-dominated presidential primaries next year, and so far Pence is sitting out 2016, the timing could not be worse. The NCAA college basketball finals are about to begin in Indianapolis, and high school seniors are trying to decide right now whether to attend Indiana colleges and universities – or not. No wonder Indiana University felt compelled to issue its own mini Bill of Rights. Longer term, Indiana is a manufacturing state in dire need of what one analyst called “ hipster brains,” the type drawn to creative, innovative, open-minded environments. The new law will send the opposite message unless and until Indiana repeals it, or passes a strong anti-discrimination law that protects lesbian, gay, bisexual and transgender citizens. 
The fundamental point here is this: Personal faith is a trump card in some instances, but it doesn’t trump equal treatment under the law. 
Look, if you don’t support gay marriage, have the cake or flowers delivered by an employee who does. Accept the business – it’s the American way. And swallow your religious objections, which is also the American way. Ask any Quaker whose tax dollars financed a war, any Christian Scientist whose taxes support medical research, any atheist whose child is learning creationism in a public school. Ask any 1960s motel operator who believed God approved of segregation, but had to rent rooms to black people anyway. And ask Richard Bosson, a justice on the New Mexico Supreme Court that ruled a photographer had to document a gay wedding. Respect for those who don’t believe as we do, he wrote, is “ the price of citizenship.” 
Writing in The Washington Post, Phillip Bump notes:
There has been ferocious public backlash against the bill, including criticism from the business sector. Apple's Tim Cook spoke outagainst it, as did Angie's List (despite its CEO having been a big Pence backer). So, too, did the NCAA, which had offered concerns about the bill in advance of this weekend's college basketball Final Four in Indianapolis. Pence didn't do much to mask the role the NCAA's opposition likely played, calling for an amendment by the end of the week -- that is, before tip-off... 
Public opposition to the bill drowned out support for it, but businesses likely made the difference. Apple is a fairly liberal company; Angie's List is not. Accenture and Eli Lilly and Levis aren't exactly known for staking out positions on the far left of the political spectrum. That the NCAA turned the screws even slightly in the state that houses its headquarters -- and which must be one of the states most friendly to its product (see: Hoosiers) -- seems, stepping back a bit, to be remarkable. I mean, NASCAR opposed the bill. Being anti-gay is bad for business, and being bad for business is bad politics.
The sports angle is especially bad for Indiana, and Indianapolis in particular, which may be why the city's mayor was quick to reject the law. For decades, Indianapolis has successfully wooed amateur sports governing organizations and  premier-level athletic events. Anything that jeopardizes the city's standing is seriously bad business.

Chicago mayor Rahm Emanuel has jumped on Indiana's self-inflicted shot in the foot by inviting a dozen Hoosier State corporations to rejoin the 21st century:


Emanuel aides asked me not to name particular companies that have been targeted by the letters, which went out March 27. But they gave me a copy of one, which went to a major industrial firm, and it pulls no punches. 
The law Indiana Gov. Mike Pence signed last week and which he said yesterday would not be repealed "threatens Indiana's 21st century economic resurgence by taking the state back to the 1960s," the letter says. 
"But (Chicago's) great strength is the quality of our workforce and the fact that Chicago is a welcoming place," the letter continues. "Today, you cannot succeed in the global economy if you discriminate against your residents by treating them as second-class citizens. 
"As Gov. Pence changes state law to take Indiana backwards, I urge you to look next door." 
The letter goes on to say the city recently has gained jobs and corporate headquarters—in part because of its diversity. "Consider Chicago as a place to move and grow your business," it reads.
The right wing embrace of discrimination goes back at least to the "Southern strategy" of the Nixon era, which wooed Southern Democrats across the line with a promise of de facto non-enforcement of African-American civil rights.

Then the gays blipped on the radar.

The real lineage of Indiana’s law is the largely successful efforts to discriminate against gays that took place in the 1970s. Ground zero for these efforts was Miami, which in 1977 became the first major U.S. city to pass an ordinance making it illegal to discriminate on the basis of sexual orientation. In response to that act, Anita Bryant, a Christian singer and spokeswoman of the Florida Citrus Commission, organized the Save Our Children campaign to repeal the nondiscrimination ordinance. 
Bryant grounded her right to discriminate in religious terms, saying, “If this ordinance amendment is allowed to become law, you will, in fact, be infringing upon my rights and discriminating against me as a citizen and as a mother to teach my children and set examples and to point to others of God’s moral code as stated in the Holy Scriptures.” The campaign was successful. Miami repealed the ordinance, and for another two decades employers, landlords, and businesses were free to discriminate against people based on their sexual orientation. Bryant’s efforts inspired other municipalities to repeal their nondiscrimination laws, and in time, to pass laws to actively protect discrimination.
Then came Hobby Lobby. In this 2014 decision, the Supreme Court vastly expanded the reach of the federal RFRA to protect the religious convictions of businesses, as opposed to individuals, and to apply to non-trivial mandates -- in this case, the Affordable Care Act's mandate that employer-sponsored health plans cover contraceptives. Justice Ruth Bader Ginsburg, asserting in her blistering dissent that the law had been designed "to serve a far less radical purpose," warned that the court "has ventured into a minefield." 
Who could disagree today? 
Gov. Pence and the Indiana Legislature followed the court into no-man's-land, and they've been blown up. Pence's defense that 19 other states already have RFRAs implies that Indiana has been attacked for being in the wrong place at the wrong time, but timing is everything, and laws like SB 101 deserve, and are receiving, greater scrutiny. Tough luck. 
The list of businesses that have spoken out against the Indiana law, or taken direct action in response, has been growing every day. The CEOs of nine companies with a significant Indiana presence, including Indianapolis-headquartered Anthem and Eli Lilly & Co., wrote Pence and legislative leaders on Monday, urging them to "take immediate action" to ensure that Indiana law can't be used to discriminate "based upon sexual orientation or gender identity." Salesforce.com and Angie's List have taken concrete steps to reduce their investments in the state, the governors of Connecticut and Washington and mayor of San Francisco have barred official travel to Indiana, and at least two convention sponsors have indicated they'll be taking their business elsewhere.
Beyond the immediate impact, there is evidence that discrimination harms economic growth more generally. 
Economists from Stanford and the University of Chicago calculated in 2013 that the lowering of employment barriers against white women and black women and men accounted for as much as 20% of the productivity gains in the U.S. economy between 1960 and 2008. That's an immense effect to stem from a single factor. It underscores how deeply economic growth can be suppressed by discrimination on the basis of sexual orientation. But that's a modern outlook, and Indiana's willingness to overlook it merely to carry the flag for extreme religious conservatives shows how far behind the curve its political leaders have fallen. 
What’s most interesting about the business community’s response—and we can add NASCAR and several Indiana universities to those expressing dismay with SB 101—is what it says about the private sector’s willingness to speak out on an issue that used to be considered just cultural warfare—civil rights based on sexual and gender orientation. The companies that have spoken out can’t all be pigeonholed as touchy-feely Silicon Valley types—not when they include Wal-Mart, Eli Lilly, and Anthem. 
Many of these companies have shown in their human resources policies that they understand that discrimination is bad business. Among other drawbacks, it interferes with recruitment of the best personnel and reduces their appeal to customers. America is gradually becoming a more inclusive society, as can be seen by the expansion of same-sex marriage.
In the cut-throat world of interstate competition for lucrative American business operations, what will gladden the hearts of economic development offices than to hear that nearly half the states have taken a major card- diversity- off the table? 

Eric Doden's successor is in for a hard ride.


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