Indiana Gov. Mike Pence (AP Photo/Darron Cummings)

It still isn't clear what the legal ramifications of Indiana's new law on religious freedom will be, but meanwhile, The Washington Post's Catherine Rampell notes a remarkable shift in the business community on the question of discrimination.

Economists used to assume that discrimination helped firms attract customers and workers who themselves supported discrimination. As economists such as Gary Becker and Milton Friedman argued, if the customers didn't care, the owner would pay a penalty in higher wages or lost business from refusing to hire or serve certain groups. As Rampell writes, the Indiana example shows that businesses' concerns have shifted:

Almost immediately, the Republican chief executive of Angie’s List announced the company was canceling its planned $40 million expansion in Indianapolis. The chief executive of Salesforce said he had canceled all his company’s events in Indiana and advocated a 'slow rolling of economic sanctions' against the state.

Businesses have fought similar laws elsewhere, too, saying they worry that a climate more tolerant of intolerance, either real or perceived, will make it harder to recruit talent, retain customers and attract tourists. ...

If in Becker’s day firms feared that customers would punish them for inclusiveness, today firms fear customers will instead punish them for exclusiveness. If in the past, to stay competitive and attract the most desirable talent, you needed to be discriminatory, today the opposite may be becoming true.

Keep reading for more on the law.


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What's in Wonkbook: 1) Indiana's religious-freedom debate 2) Opinions, including DeLong on Milton Friedman and the financial crisis 3) Republicans, income inequality and more

Chart of the day: Older workers who are laid off have a harder time finding a new job. Lydia DePillis in The Washington Post.

1. Top story: Indiana reconsiders "anti-gay" law

Lawmakers say they'll address criticisms that Indiana's new religious-freedom law encourages discrimination. "Republican lawmakers in Indiana promised Monday to amend a religious liberties bill that critics have labeled as anti-gay, bowing to protests that have rapidly spread to several other states considering similar measures. Indiana House Speaker Brian Bosma (R) said the legislature would act as soon as this week to 'clarify' the state’s new Religious Freedom Restoration Act, which grants individuals and businesses legal grounds to defend themselves against claims of discrimination. The fix, Bosma said, would make clear that the law does not allow people to discriminate against gays, as critics contend. Opponents of the measure say the fix suggested by Bosma and other Republicans is vague and probably insufficient. Meanwhile, criticism of the act, signed into law last week by Gov. Mike Pence (R), continued to mount." Sandhya Somashekhar and Mark Berman in The Washington Post.

Republicans are defending Pence and the law, which could become a liability in the 2016 campaign. "Candidates lined up to show their support for it and the embattled governor who signed it: Jeb Bush said Pence did the 'right thing,' Rick Santorum said he stands 'in defense of religious liberty and real tolerance,' and Marco Rubio said people should be able to 'live out their religious faith in their own lives.' With the exception of the libertarian-minded Rand Paul, lockstep support from the rest of the Republican field—most of whom are courting evangelical voters—now looks all but guaranteed." Alex Roarty in National Journal.

Religious freedom laws used to have bipartisan support, but things have gotten complicated. "When the federal government adopted a religious protection act in 1993, same-sex marriage was not on the horizon. An informal coalition of liberals and conservatives endorsed the Religious Freedom Restoration Act because it seemed to protect members of vulnerable religious minorities from punishment for the exercise of their beliefs. ... But over time, court decisions and conservative legal initiatives started to change the meaning of those laws, according to liberal activists. The state laws were not used to protect minorities, these critics say, but to allow some religious groups to undermine the rights of women, gays and lesbians or other groups. ... In the 1990s, for example, in the kind of case that raised red flags for civil rights advocates, landlords cited religious beliefs, sometimes with success in court, after refusing to rent to unmarried heterosexual couples." Erik Eckholm in The New York Times.

KESSLER: Is the law the same as the federal religious freedom law signed by President Clinton? "Pence used this talking point twice while refusing four times to answer a direct question from host George Stephanopoulos about whether the law would permit discrimination against gays and lesbians. ... During debate over the bill lawmakers voted down amendments to make clear that the law was not intended to foster discrimination. ... Some advocates of the law have expressly said that it would allow businesses to refuse to support same-sex marriages. ... Ultimately, the actual impact and meaning of the Indiana law will be determined by the courts. ... If a governor is going to appear on national television, he needs to come prepared with an answer to an expected question. Advocates of the law have said the law will give new rights to Christian businesses that oppose same-sex marriage, and Pence should be able to explain whether he believes they are right or wrong." The Washington Post.

EPPS: There are a couple of important differences. "First, the Indiana law explicitly allows any for-profit business to assert a right to 'the free exercise of religion.' ... Second, the Indiana statute explicitly makes a business’s 'free exercise' right a defense against a private lawsuit by another person, rather than simply against actions brought by government. ... Of all the state 'religious freedom' laws I have read, this new statute hints most strongly that it is there to be used as a means of excluding gays and same-sex couples from accessing employment, housing, and public accommodations on the same terms as other people." The Atlantic.

LINDENBERGER: Discriminating against gays is already legal. Stephanopoulos asked Pence "for a one-word answer as to whether the new law makes it legal for businesses to refuse service to gay couples. Pence dodged, insisting that the media misunderstood the law's purpose. But had he been more honest, Pence would have said: George, Indiana doesn't need a new law to permit businesses from discriminating against gay customers. It's perfectly legal to do that right now. That's because in Indiana, and in most other states, businesses who want to discriminate against gay customers face no obstacles under state law in doing so." The New Republic.

PONNURU: People who don't want to serve gays should be able to defend their beliefs before a judge. "These religious-freedom laws only create a legal claim for people who object to the application of a law. They don't guarantee that those claims will prevail -- and, in practice, such claims haven't fared well in court. ... I don't believe people who make wedding cakes should be forced by law to cater same-sex weddings if they object. People of good will can differ on that point. What we are discussing, though, is a law that theoretically lets those objectors have a day in court (in one of the few Indiana jurisdictions where the law regulates this choice in the first place). And that's just not the same as bringing back whites-only water fountains." Bloomberg View.

RAMPELL: Is the conventional economic wisdom about discrimination out of date? "Reams of economic research, going back to Nobel laureate Gary Becker’s 1955 dissertation on racial discrimination, have suggested that a key reason firms discriminate is that their customers and employees probably demand it. ..." The Washington Post.

Indiana isn't the only state trying to protect discrimination, writes Tim Cook, chief executive of Apple. "A wave of legislation, introduced in more than two dozen states, would allow people to discriminate against their neighbors. Some, such as the bill enacted in Indiana last week that drew a national outcry and one passed in Arkansas, say individuals can cite their personal religious beliefs to refuse service to a customer or resist a state nondiscrimination law. Others are more transparent in their effort to discriminate. ... America’s business community recognized a long time ago that discrimination, in all its forms, is bad for business." The Washington Post.

The controversy reveals liberals' intolerance of religion. "In the increasingly bitter battle between religious liberty and the liberal political agenda, religion is losing. Witness the media and political wrath raining down upon Indiana because the state dared to pass an allegedly anti-gay Religious Freedom Restoration Act. The question fair-minded Americans should ask before casting the first stone is who is really being intolerant." The editorial board of The Wall Street Journal.

2. Top opinions

DeLONG: Friedman's monetarist ideas led policymakers astray during the financial crisis. "In A Monetary History of the United States, published in 1963, Friedman and Anna Jacobson Schwartz famously argued that the Great Depression was due solely and completely to the failure of the US Federal Reserve to expand the country’s monetary base and thereby keep the economy on a path of stable growth. Had there been no decline in the money stock, their argument goes, there would have been no Great Depression. ... What is more likely, however, is that the drop in interest rates resulting from the interventions needed to expand the country’s supply of money would have put a brake on the velocity of money, undermining the proposed cure. In that case, ending the Great Depression would have also required the fiscal expansion called for by John Maynard Keynes and the supportive credit-market policies prescribed by Hyman Minsky." Project Syndicate.

SUNSTEIN: The Supreme Court has allowed corporations to use the First Amendment as a shield against any form of regulation. "From the founding period until late in the 20th century, the court never ruled that the First Amendment protects commercial advertising. Then suddenly, in 1976, it reversed course... Recent decades have seen a genuine revolution in free speech law. Far from being used to ensure the preconditions for self-government, the First Amendment is being regularly invoked as a barrier to fairly modest regulatory requirements. Ironically, those requirements are usually designed to ensure that consumers are informed." Bloomberg View.

Hospitals should take care of elderly patients before discharging them, write Jonathan Gruber and Joseph Doyle of the Massachusetts Institute of Technology and Vanderbilt University's John Graves. "There is widespread agreement that the United States wastes up to one-third of health care spending, yet pinpointing the source of the waste has proven difficult. But our research shows that a major source of the waste comes after a patient is released from the hospital. ... What is really going on is excessive use of skilled nursing facilities post-hospital discharge. Patients who go to hospitals that have a high rate of discharge into SNFs are much more likely to die than those who are transported to hospitals that send their patients home instead. The worst outcomes arise from hospitals that don’t spend much on the initial admission, but have high patient spending in the remaining days after discharge. This does not necessarily reflect poor care in SNFs, but rather the fact that hospitals that use SNFs more than average are not providing good enough care to their patients. ... One of the most significant payment reforms under the Affordable Care Act is the introduction of penalties for hospital readmissions, which has encouraged hospitals to reduce these bounce-backs to an unprecedented extent. Our findings suggest that, at a minimum, the existing system should also track hospital use of expensive post-acute care and penalize them for it." The Boston Globe.

3. In case you missed it 

When it comes to inequality, likely presidential candidates listen to their donors, not public opinion. "It’s not just right-wing presidential aspirants like [Sen. Ted Cruz (R-Tex.)] and Mr. Paul whose statements on inequality diverge from public opinion. Hillary Rodham Clinton, though she has been more open to a government role in solving the problem, has yet to mention tax increases as a possible answer. By contrast, more than half of Americans and three-quarters of Democrats believe the 'government should redistribute wealth by heavy taxes on the rich,' according to a Gallup poll of about 1,000 adults in April 2013. There is, however, one group of Americans with whom the Republican contenders and Mrs. Clinton, the likely Democratic front-runner, are generally in step: the wealthy. In recent years, a small cohort of scholars has begun to study the policy views of the country’s most affluent voters, and the results are especially illuminating on the subject of inequality." Noam Scheiber in The New York Times.

Income inequality is bad for your health. "A study from researchers at the University of Wisconsin Population Health Institute examined a series of risk factors that help explain the health (or sickness) of counties in the United States. In addition to the suspects you might expect — a high smoking rate, a lot of violent crime — the researchers found that people in unequal communities were more likely to die before the age of 75 than people in more equal communities, even if the average incomes were the same." Margot Sanger-Katz in The New York Times.

Labor activists hope to broaden their campaign against McDonald's into a national effort. "While the movement may not be close to persuading McDonald’s to adopt a $15 minimum wage, even the campaign’s critics acknowledge it has achieved some of its goals by prompting a national debate about low-wage work and nudging various cities and states to raise their minimum wage. ... With Walmart and several other companies starting to raise their base pay in response to public pressure and tighter labor markets, McDonald’s may eventually feel compelled to join in." Steven Greenhouse in The New York Times.

Bush and Wisconsin Gov. Scott Walker offer competing visions of the Republican Party. "Mr. Bush, the former Florida governor, and Mr. Walker are fast becoming the most prominent exponents of two dueling visions of how the Republican Party can retake the White House in 2016 — by extending its reach, or by energizing more of the sorts of people who have sided with Republicans in the past. The two men share many policy positions, but offer strikingly divergent messages and are pursuing very different electoral strategies." Jonathan Martin in The New York Times.

How would Republicans replace Obamacare? "Conservative repeal-and-replace plans have popped up from time to time over the last five years, but rarely garnered more than token press coverage and have never received a full vote in front of Congress. In other words: There has been no vigorous debate that shapes a white paper into real policy. ... There are arguably three schools of thoughts within the GOP on health care, said Avik Roy, a senior fellow at the Manhattan Institute. One wants to effectively revert to a pre-Obamacare world. Another acknowledges the new reality that Obamacare has created and encourages conservatives to consider what's politically viable in that world. The third would say that Republicans should yield the coverage side of health care reform to liberals and work on the best free-market alternative they can muster without measuring it against the ACA." Dylan Scott in National Journal.