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Political correctness is good for business, say UBS economists

Complaints about political correctness could well point toan economy's underlying health, according to new

research which examines the relationship between a

society's attitudes and its economic success.

'Any company that exhibits prejudiced behaviour is basically sending out a major 'sell' signal to all

concerned' Photo: Graeme Williams

ByEmma Rowley

7:52PM BST 30 Jun 2011

Aside from the human cost of discrimination, there is an economic case to be made for an

open-minded acceptance of others' differences, analysts at UBS argue.

Prejudice - defined as a negative, generic and irrational attitude towards a specific group in

society - appears to be both a symptom and a cause of economic weakness, they found after

crunching data on competitiveness from the World Economic Forum and survey evidence of

nations' attitudes.

The economic cost of prejudice arises as certain members of society are prevented from using

their talents to their full, supressing innovation. That means prejudiced people effectively act

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8/10/2019 Political Correctness is Good for Business.telegraph

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as 21st century Luddites, the modern day versions of the 19th century workers who protested

against the new machinery of the industrial revolution, the analysts believe.

Just as they [the Luddites] would go around smashing up machines they were scared of,

[prejudiced] people are effectively destroying human capital, said Paul Donovan, the UBS

economist leading the research. What would happen if the secret to energy effectiveness orgrowing food productivity is locked up in the mind of somebody who is denied the

opportunity to develop because of prejudice?"

As examples of such destruction of "human capital", Mr Donovan pointed to Ugandas

expulsion of Asian workers and the loss of their professsional skillset in the 1970s, and - in

the UK - the tragic case of Alan Turing, the Second World War code breaker who killed

himself after being tried and convicted of being homosexual.

"Any society - or indeed, any company - that exhibits prejudiced behaviour is basically

sending out a major 'sell' signal to all concerned, Mr Donovan said.

The issue is becoming all the more pressing, according to the analysts, who see the world

entering an environmental credit crunch in which scare resources mean human ingenuity

will be the main driver of economic activity. A society which suppresses or ignores certain

members will therefore be hobbling itself in the global competition.

However, the aftermath of the financial crisis means that there is a risk prejudice is on the

rise, the team warned. People are becoming more nervous about their standards of living and

more aware of income inequalities, which were previously disguised by easy credit. In such

an environment, people may be more inclined to resent those they perceive as a threat to their

relative social position.

That means much-maligned "political correctness" could point to economic strength, if it

appears in the desired form.

Political correctness is a very loose term, said Mr Donovan. If we are looking at absolute

positive discrimination under political correctness, the view of an economist is that any

discrimination ... is economically damaging. If its about [promoting] opportunity because of

language and behaviour, then thats something than can actually foster economic growth in a

country."

The team looked specifically at the economic impact of racism, xenophobia, religiousintolerance and homophobia, although Mr Donovan cautioned that other formssexism or

prejudice against people with disabilitieswere as pernicious. All prejudice, whether

discrimination by gender or disability, is equally detrimental to economic development, he

said.