March 31, 2015

Ball State Economist Says Impact Of Economic Boycotts Over RFRA Would Be Small

Protesters gather on the steps of the Statehouse during a rally Saturday. - Michelle Johnson

Protesters gather on the steps of the Statehouse during a rally Saturday.

Michelle Johnson

Since Indiana’s General Assembly passed the Religious Freedom Restoration Act, Hoosiers and others have promised an economic boycott that they say will have large negative impact.  But a Hoosier economist says the size of that impact will likely be quite small.

The hashtag Boycott Indiana has been seen on social media and on posters at rallies opposing Indiana’s new religious freedom law that takes effect in July.  A similar statute exists in more than a dozen other states, and Ball State University economist Michael Hicks says threats of economic boycotts in those states didn’t do much damage.

“There’s no correlation between the RFRA act and economic growth or wage changes or anything like that," Hicks said. "And I think the reason is that there are very few examples of this law being applied in any setting anywhere.”

Hicks says Indiana’s law is poorly written – and the discussion of whether or not it allows discrimination is why national companies have spoken against the law, saying it will keep new businesses from locating in the state.  In an interview with WIBC in Indianapolis, Indiana Fiscal Policy Institute President John Ketzenberger says the law will keep new companies out.

“It affects people’s decisions on locating jobs, or people, or business in the state of Indiana over the long term," Ketzenberger said. "It will have an effect on the economy.”

But on that point, Hicks says he doesn’t agree.

“Businesses, for all their bluster, are not going to make big investment decisions over legislation that doesn’t affect them or their customers," Hicks said. "In many places that have either been boycotted or tried to exclude some sort of economic activity,  these are all smoke and not much effect.”

Hicks says the main cost to Indiana’s economy will be in fixing its reputation.

“Indiana is hosting a Final Four on Easter weekend, and so this would have been the time that every news outlet would have told a great story about Indianapolis and about Indiana in general.  And instead, it’s going to be a story about a law that affects nobody," Hicks said. "Indiana is now going to have to spend a lot more resources convincing people that this is a good place to go when it is a great place to visit.”

Gov. Mike Pence has asked the legislature to clarify the law’s intent that it does not promote discrimination by the end of the week.

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