Monday, March 30, 2015


RFRA stands for the Religious Freedom Restoration Act which was signed into law in Indiana.  The NCAA Final Four (men's basketball) will be held in Indianapolis this year.  Indiana is a solidly mid-Western state with little native controversy.  Most people with a need for excitement moved to Illinois or the east coast.

Roberta X, a blogger who I enjoy reading, speaks poorly of this act.  It is a public relations disaster, at least from a timing standpoint.  Most of her arguments are economic.

Roberta says that the law is redundant because there is already a Federal statute on the books that is almost identical.  Sadly, we learned that the US Attorney General, in fact, the whole Federal Justice system does not feel bound to enforce laws evenly.  That portion of the Executive branch is probably politicized beyond repair.  Having that kind of statute on the books at the local level gives business owners a second venue.

Roberta's primary argument is that the RFRA poisons Indiana's chances of recruiting world HQs of Fortune 500 companies.  While Purdue is an outstanding engineering school, I don't think Indiana or West Lafayette have sufficient magnetism to convince any major Silicon Valley start-ups into moving.  California can push them to Indiana but Indiana cannot pull them in.

Dark gray line is the rate of business formation per 100,000.  The rate topped out 2200/million in 1978 and 1987.

Edited to add:
Indiana's best chance for gaining a Fortune 500 company headquarters is to generate more home-grown, Fortune 500 companies.  The way to do that is through mass selection.  The US economy currently generates approximately 1250 businesses per 1,000,000 of population.  Indiana currently has a population of about 6.6 million.  The state's goal should be to double the "average" business formation rate, or 16,500 new businesses per year.
End edit.

RFRA is not just about religious freedom.  It is also about property rights.  It reaffirms the business owner's right to manage their business...their property.  One can argue that a business that publishes or posts prices is, in effect, making a public contract.  One can also argue that refusal to deliver the goods at that price constitutes a breach-of-contract.  Fair enough.  Businesses who (yes, "who") have sufficient energy about traditional families can forgo the efficiency of pre-printed menus and price lists or can add an asterisk.

But what recourse is left to a business owner (and other customers) when customers come in who are disruptive?  There is a range of behavior...let's call it "boorish behavior"...that is not criminal but deprives other customers of the full enjoyment of their purchase and deprives business owners of revenue and profit.  Let me offer a concrete example:  A "Drag Festival" at a Chuck E Cheese.  I think Indiana's RFRA extends protection to shop owners who must deal with these situations.  In some cases it will be poor economics on the part of the shop owner, but those consequences will fall back on them.

I fail to see how clarification of property laws is bad for business.  One damper on business creation is the fear of frivolous, opportunistic or predatory lawsuits.  Good law gives the boors less room to maneuver.

The Act does not require that the freedom be exercised.  Businesses that use it stupidly will quickly fail.  It is that Darwin thing.

1 comment:

  1. Good summation, and I agree. It will also give the attack dogs pause before they purposefully start stirring stuff up!