opinion – prejudice is bad for the business world and the economy

The Luddites of this industrial revolution seek to destroy human capital by prejudice

Members of the LGBT + community are attacked. There has been a 20% increase in reports of LGBT + hate crimes in the UK over the past year. In the US, the FBI reported that rising hate crimes are based on sexuality. Changes in the U.S. Supreme Court have feared that marital equality could be reversed. Local governments have declared almost a third of Poland as ‘LGBT-free zones’.

This increase in prejudice is rooted in the changing economy of our time. We are experiencing one of the most dramatic periods of economic and social upheaval in history. Some people’s income and social status will rise, but others will experience a decline. That relative decline – to get worse when things are going better with your neighbor – encourages prejudice.

The increasing complexity of the world can make it harder for someone to understand why their income or status has changed. People yearn for a simple answer. Finding a scapegoat – a social group to blame – creates a deceptively simple explanation for economic pain. Stories like, “It’s not my fault I lost my job; the other person took it” comfort those left behind by change.

The LGBT + community is an obvious target for prejudice. Estimated at between 8% and 10% of the world population, it is large enough to be seen as a threat but small enough to prosecute. Many of the improvements in LGBT + rights have been recent. Economic nostalgia – wanting to go back to “the way things were”, easily links to a desire to reverse social change.

Prejudice has a terrible human cost. But it can also cause enormous economic damage. Economic success in the coming years is not about technology. Economic success is about using technology. How do we use technology correctly? By having the right person at the right time in the right job.

It is economically a lost strategy to reject the right worker for a job because he is open about who he loves. Prejudice will still cause economic damage if someone is not at work. The extra stress of disguising who you are for colleagues means less productive workers. Whether or not, harm to the LGBT + community weakens economic performance.

Prejudice also stops divergent thinking. For a company, it can be fatal in a period of structural change. When established ways of doing business are turned upside down, it will only have opportunities and risks if you have only one way of thinking. Challenge of established thinking is what generates success in an industrial revolution.

The way we use technology can help fight prejudice, but it can also make it worse.

Modern communication helps people to feel less isolated – important for minority groups such as the LGBT + community. It helps organize demonstrations – if you want to boycott a company that does not support LGBT + rights, there is an app for that.

Social media also brings non-LGBT + people into contact with the community, and personal contact is a powerful force in defeating prejudice. But extreme biased groups are also a minority. The technology that helps the (minority) victims of prejudice also makes it easier for their persecutors to find each other and work together.

The changes of the fourth industrial revolution can raise our standard of living. We can emerge with greater economic and environmental efficiency. But the revolution is also dangerous.

In the first industrial revolution, the Luddites crushed the physical capital of machinery because they saw it as the destruction of their status. The Luddites of this industrial revolution seek to destroy human capital by prejudice.

Economics is not the main argument against prejudice, but it is a powerful issue. Ultimately, the message is simple: prejudice is bad for the business world and the economy.

Any views expressed in this opinion piece are from the author and not from the Thomson Reuters Foundation.

Paul Donovan is Chief Economist at UBS Global Wealth Management. His book “Profit and Prejudice: The Luddites of the Fourth Industrial Revolution” will be published on November 6 by Routledge.


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