The Economic Case for Marriage Equality: Why Exclusion is Bad for Business

The Supreme Court this week heard arguments on marriage for same-sex couples. Those arguments represent a fault line in American life: on one side are those who believe our country is made better through exclusion and policies that divide us and on the other side are those who believe our country is improved through inclusion and policies that allow more people to participate.

As you might expect, the arguments the lawyers made revolved around questions of fairness, justice and the role of the state in regulating our relationships. But here’s the thing: out here in the real world, the market (both of ideas and commerce) has already decided this question. The verdict? Inclusion wins.

Don’t get us wrong: it is fair and just to make sure that everyone in America is free to marry the person they love and free from discrimination. But it is also good for business. The states that are fighting for exclusionary laws like marriage bans (we’re looking at you Michigan, Kentucky, Tennessee) or “religious freedom” laws (would Louisiana, Indiana, Arkansas and others please stand up?) are endangering their economic future. Americans have rightly realized that bigotry isn’t just morally wrong; it is economically stupid.

Here’s the 21st century reality: inclusion strengthens our country, our institutions, and our economy. And politicians in the twenty-one states fighting to keep their discriminatory marriage practices appear to be totally clueless about how modern technological economies work, and how extreme the competition for talented workers that drive innovation has become.

In the technological economy of the 21st century, growth and prosperity are created through a virtuous cycle between innovation and demand. Innovation is the process by which we solve all human problems, and thus raise living standards. Consumer demand is the mechanism through which markets distribute and incentivize innovation. And it is economic inclusion—the full, robust participation of as many people as possible—that drives both innovation and demand.

Innovation is an evolutionary process and, just like in the biological world, diversity is the key to evolution. The more cognitive diversity we have—the more people simultaneously approaching the same problem from as many different backgrounds and perspectives as possible—the greater the rate of innovation. It’s not how hard you try; it’s how many different ways you try to solve a problem that leads to success. Innovation is driven by differences, not sameness.

The evidence is clear: diversity does not hinder growth—it supercharges it. That has always been America’s competitive advantage: we have the most diverse workforce in the world, and for all our problems, we do a better job of integrating diversity than anyone else. Diversity is America’s most valuable resource; it is what makes us the most innovative nation on Earth.

Corporate America understands this. It’s why hundreds of the country’s most prominent businesses signed on to an amicus brief to the Supreme Court in support of marriage equality. And it is why 69 percent of large corporations responding to a 2011 Forbes Insight survey reported that they have internal offices overseeing diversity and inclusion strategies, most of them reporting directly to the CEO, board of directors, or other top executives.

It also explains why Wal-Mart pressured Arkansas Governor Asa Hutchinson to refuse to sign that state’s self-destructive religious freedom law. And who can forget the instant uproar from firms national and local about Indiana’s religious freedom law? These aren’t just public relations disasters, they are bad for business, making it harder to attract the diverse and inclusive workforce that is absolutely critical to continued innovation and long-term success in an insanely competitive global market.

Including more people is simply good for business and good for growth. That is why inclusive cities like San Francisco, Seattle, New York, and Boston are kicking the daylights out of exclusionary places like Michigan, Tennessee and Indiana. It’s not that LGBT citizens are more innovative, it’s that they add to our diversity and we are collectively more innovative as a result. And the best and the brightest – gay, straight or otherwise – want to work for companies and live in states that foster this dynamic.

Here in Washington State we know something about creating an inclusive environment – we passed comprehensive anti-discrimination laws and were one of the first states in the county to pass marriage for same-sex couples by a popular vote. In fact, some of the most recognizable corporations in the world – Amazon, Starbucks, Microsoft and others – were at the forefront of passing marriage equality in Washington State because they understand that diversity attracts diversity. It is a positive feedback loop that has boosted our state’s economy and helped make Seattle the fastest growing big city in America. And as our city grows, it is growing more diverse.

The great danger for exclusionary places is that feedback loops can be positive or negative — they can be virtuous cycles or death spirals. Make it clear that LGBT people or immigrants or other minorities aren’t welcome, and they will flee and so will their allies. Leading businesses that depend on the diversity that drives innovation will look elsewhere to find inclusive communities with a workforce that is the key to success. The best and the brightest will go to where the best jobs are. Left behind will be an increasingly homogenized, narrow, and less competitive population, electing the same kind of leaders who will enact the same kind of laws that chase even more smart people away, creating a “brain-drain” death spiral that both degrades the ability of that place to compete, while simultaneously strengthening competing geographies.

We are unlikely to be able to change the moral reasoning of political leaders who are fighting for discrimination and against marriage equality. But we can surely take advantage of their economic shortsightedness. So, to all of you creative, innovative, different people living in places that have chosen to fight to exclude people rather than include them: The world faces tremendous challenges. They will only be solved by people like you. Come to places like Seattle that will embrace you, and leverage your talents.

We need you. The world needs you. Their loss will be our gain.

Nick Hanauer is a founder of Second Avenue Partners, a venture capital company in Seattle specializing in early-stage startups and emerging technology. He has founded or financed dozens of companies, including aQuantive Inc. and Amazon.com, and is the co-author of two books, “The True Patriot” and “The Gardens of Democracy.”

Zach Silk ran Washington United for Marriage, the successful campaign to pass marriage equality in Washington state in 2012. He is a veteran campaign professional and serial entrepreneur. He is the Chief Troublemaker here at Civic Ventures.

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