Indiana indulges in a costly anti-gay experiment

By now, you have surely heard about Indiana’s so-called Religious Freedom Restoration Act law 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 a Washington Post op-ed by Apple Chief Executive Officer Tim Cook, who 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 Gov. Jan Brewer, R, vetoed it after opposition from the state’s business interests.

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, now 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, 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.

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 indulging the expensive prejudices of its governor and the intolerance of those whose bidding he is doing.

Barry Ritholtz, a Bloomberg View columnist, is the founder of Ritholtz Wealth Management. He is a consultant at and former chief executive officer for FusionIQ, a quantitative research firm.