Indiana's Costly Anti-Gay Experiment
By now, you have surely heard about Indiana’s so-called Religious Freedom Restoration Act and its potential for giving cover to those who discriminate against gay people. A backlash that had already been gathering momentum burst open this weekend, driven by an op-ed by Apple Chief Executive Officer Tim Cook in the Washington Post. As Cook wrote:
America’s business community recognized a long time ago that discrimination, in all its forms, is bad for business.
The law's passage has led to a torrent of business responses. I want to discuss the potential economic aspects of these, and what it might mean to the state of Indiana.
At stake are losses for manufacturing ($95.4 billion in annual state output), finance ($44 billion) and tourism ($10.3 billion) -- not to mention reputational harm. Arizona adopted a similar religious-freedom bill last year, but “opposition from the state’s business interests led Republican Governor Jan Brewer to veto it.”
Any discussion of the economic implications and financial consequences of this law must take account of the speed of the response and the wave of unfavorable publicity. The hashtag #BoycottIndiana quickly trended to the top of Twitter. Retired National Basketball Association greats Charles Barkley and former Indiana Pacer Reggie Miller noted their disappointment. Barkley, who now works as an NBA and National Collegiate Athletic Association sports commentator, said that the NCAA's Final Four championship shouldn't be held in Indiana. With the tournament final scheduled for this weekend, a change is doubtful at this late date.
The NCAA, which is based in Indianapolis, has already expressed grave doubts about the new law. The organization has a deal with the state to host the men's Final Four in 2021 and the women's final in 2016. It is a novel legal question whether the new law offers sufficient grounds to allow the NCAA out of that deal. There already is pressure from some quarters for the NCAA to leave Indiana.
Some businesses aren't bothering to wait to assess the fallout. Here are a few of the responses. There will surely be more.
• Angie’s List: The crowd-sourced business review website planned a $40 million expansion of its Indianapolis headquarters but has put the expansion on hold. The company said it is evaluating the implications of the law for its employees.
• Gogobot: The travel-advice site has a note on its Indiana page that warns vacationers considering a visit of the new law’s potential discriminatory impact. “If somebody used Gogobot to research a trip to Indiana and ended up getting turned away at a restaurant or hotel, we thought that would be important for our travelers to know,” said Gogobot CEO Travis Katz.
• CEOs of nine Indiana-based companies delivered a letter objecting to the law to the state's Republican governor, Mike Pence. These include many of Indiana’s largest employers:
Tom Linebarger, CEO of Cummins Inc.
Bill Oesterle, CEO of Angie's List
Joseph Swedish, CEO of Anthem Inc.
Jeff Smulyan, CEO of Emmis Communications Corp.
Dan Evans, CEO of Indiana University Health
Jack Phillips, CEO of Roche Diagnostics
Scott McCorkle, CEO Salesforce Marketing Cloud
John Lechleiter, CEO of Eli Lilly & Co.
Tim Hassinger, CEO of Dow AgroSciences
• Salesforce.com: Company CEO Marc Benioff is cancelling company plans to travel to Indiana. Salesforce, which also owns Indianapolis-based ExactTarget, said it would cancel an annual conference and all other marketing events in the city.
• EMC: The data-storage company said it would withdraw from the IndyBigData conference scheduled for May 7 at the Indianapolis Convention Center. Two EMC subsidiaries, Pivotal and Isilon, which are listed as sponsors, also scrapped plans to participate in the conference. Software giant Oracle also withdrew plans to participate in the conference as did Cloudera, a big-data software company backed by Intel.
• Wilco: The alternative rock band said that it is canceling a May 7 show at Murat Theatre in Indianapolis, posting on Facebook that "Indiana Religious Freedom Restoration Act feels like thinly disguised legal discrimination.”
Some of these are all real, tangible losses for the state, while others hold the threat of costing the state still more.
The costs for this expression of bigotry could be high. The question for Indiana’s citizens is whether they are willing to indulge the expensive prejudices of its governor and the intolerance of those whose bidding he is doing.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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