The recipe of a strong economy are competitive and healthy enterprises, talented workforce, sound monetary policy, and so on. For over a century -- more so after 2008, policy makers and economists have contemplated the best route to establish economic growth. But in the process, economic orthodoxy has forgotten one critical feature of healthy economies: diversity.
Indeed, the greatest threat to markets are monopolies. When products, services, or ideas do not compete, then incentives to develop new products and ideas disappear, and innovation dissolve. Monopolies can also arise within gender and ethnic contexts. For economies, ‘cultural monopolies’ occur when one racial group, gender, or sexual orientation carries significant decision making power in markets. Such practices are not just discriminatory but lead to economic catastrophe.
However, when different backgrounds and identities come together -- in businesses, governments, and households -- cultural monopolies are broken apart. This means that more ideas spread and that people are less prone to group-think. At the company level, the pace of innovation accelerates, and at the national level, productivity and employment increase.
In order to be receptive to consumers in a globalized world, companies must embrace diversity. A Forbes survey of global companies finds that encouraging workforce inclusiveness allows for greater competitiveness and are better-adapted to the demands of highly diverse consumers.
When considering the alternative -- marketplaces void of sexual orientation, gender, and ethnic variety-- then we see a host of economic and societal tensions start to develop. In a world of ‘cultural monopolies,’ companies have less incentive to hire from and tailor products for a broad demographic, in turn marginalizing groups of people and segmenting society into winners and losers. The losers are unemployed and unrepresented in markets spawning resentment against their counterparts and adding fuel to the flame of societal tensions.
In a diverse economy, costs of doing businesses are significantly lower. Already, linguistic and cultural barriers are considered are a considerable transaction cost -- e.g., workers have to hire translators or learn various cultural facets to interact with a multi-faceted marketplace, a process that increases costs and slows the pace of business. Diversity creates an ecosystem which allow individuals to collaborate with on a constant basis. Cultural affinity is therefore cultivated through osmosis.Diversity, It's a win-win-win situation. Businesses have access to broader talent pools, people of all backgrounds become productive members, and society as a whole achieves harmony. Perhaps the next time we deal with a recession, instead of targeting interest rates or employment, we increase diversity quotas.
