Wedded To The Intolerance Of Economics

The Indianapolis Business Journal ran an excellent column written by Baker & Daniels' partner Ronald Gifford this week entitled, "Wedded to the intolerance of economics", which I wanted to share with you. It takes a critical look at the economics of enacting a discriminatory constitutional amendment like SJR-7. This is the way more of our lawmakers should think when it comes to these types of proposals.

Here it is:

You can easily name the main tools in the economic development tool kit, right? Tax climate, infrastructure, workforce, access to capital, cultural amenities, good schools.

Well, don’t forget tolerance and diversity.

Huh? Maybe you're thinking, quick, grab the toolbox; this guy has a screw loose.

And yet that's the message from four of the region’s leading businesses in response to Senate Joint Resolution 7 – the proposed state constitutional amendment that would ban same-sex marriage and potentially impact other legal rights for unmarried couples, both gay and straight.

Cummins, Eli Lilly, Emmis Communications and WellPoint all told legislators that SJR 7 would hurt their recruiting efforts, by sending the message that Indiana is intolerant of diversity. (A point of full disclosure: I'm one of Cummins' lobbyists, but these are my personal views and not necessarily those of any of my clients). Based in large part on those concerns, the House Rules Committee killed the amendment last week on a 5-5 vote.

So what’s this issue all about, anyway? Let’s look at a few facts.

First, who are we recruiting? For starters, think "Generation Next:" the 18-25 year olds. They’ve never known a world without computers or the Internet. They were born during the Reagan presidency.

Sure, we don't really understand the Gen Nexters, but there is one thing we know for sure: they’re leaving Indiana standing at the altar. Nearly 40 percent of Indiana college students leave the state after earning their degrees. And for those in the knowledge sectors, this brain drain is devastating: two-thirds of students with technical majors in the life sciences, advanced manufacturing and information technology move away after graduation.

We know something else about these students: according to a recent Pew Research Center survey of "Gen Nexters," they’re a lot more tolerant than older folks. Their views on homosexuality generally and gay marriage specifically are much more accepting than those held by the boomers and seniors. And the Gen Nexters value diversity where they live.

Here's another fact. The Kauffman Foundation recently published its “2007 State New Economy Index.” It measured 26 indicators to determine which state economies were “knowledge-based, globalized, entrepreneurial, IT-driven and innovation-based.”

We rank 31st out of the 50 states in overall scores, but near the bottom of the heap when it comes to talent: 43rd on workforce education; 39th in IT professionals; 37th in the number of scientists and engineers; 48th in patents.

Now, here's a correlation you might not have considered. Do you know how many of the 10 best-performing states in the New Economy Index have constitutional bans on same-sex marriage? Only two – Virginia and Colorado, coming in at number 8 and 9 on the charts.

By contrast, 18 of the bottom 25 states in the Index have adopted marriage amendments – and Indiana was on the verge of becoming number 19 of that group.

So, for better or worse, the states without an amendment are richer and we’re poorer. Coincidence? You be the judge.

Maybe it goes back to that primary driver of economic development: talent – the so-called “human capital.” Here’s how one expert at www.creativeclass.org put it: “It’s simple. Tolerant regions attract talent. All kinds of talent: immigrant, African American, young, gay, female, etc. Talented and skilled regions move to the front, while others stay stagnant or fall behind.” Economist Robert Lucas notes that "places that bring together diverse talent accelerate the local rate of economic development."

But why is that? Well, tolerance encourages diversity in a community. And a new book demonstrates that diversity fuels creativity and innovation. In The Difference: How the Power of Diversity Creates Better Groups, Teams, Schools and Societies, University of Michigan professor Scott Page shows that "groups that display a range of perspectives outperform groups of like minded experts." Diversity produces superior results, he proves, and the book "explains why difference beats out homogeneity."

So let's review the facts. We need talent to succeed; talent thrives where there's tolerance, because tolerance fosters diversity; and diversity fuels innovation, which attracts more talent. And so what are we doing to get Indiana into that virtuous cycle to attract that talent?

Stopping SJR 7 was a good first step. If we amend inequity into our state constitution, we will wed ourselves to the economics of intolerance. The best and the brightest will keep moving out, driving past, or flying over. We will miss out on their creativity and innovation.

So, tolerance and diversity make dollars and sense. But if you don’t think the business case is that compelling, let me suggest another reason to embrace these values.

It’s called Hoosier hospitality.