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Tolerance and Prosperity

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Yesterday, my partners and I invited Paul Romer over to USV for lunch. For those that don't know, Paul is a leading thinker in the world of economics and currently a Professor at NYU. It was a fascinating conversation. My favorite part of it was Paul's "lecture" on William Penn, early Pennsylvania, and the reaction to the growth of Pennsylvania from neighboring states.

William Penn was a Quaker and when King Charles II gave him a large piece of his land holdings in America, Penn created the colony of Pennsylvania and grounded it in the notions of tolerance and religious freedom. Instead of limiting Pennsylvania to Quakers, they welcomed all comers. And the result was that Philadelphia became the fastest growing city in America with a vibrant economy and lifestyle.

The neighboring colonies, which were initially centered around a single religion, reacted to Pennsylvania's and Philadelphia's economic success by opening up their cultural norms and becoming more tolerant as well.

Paul told us this story as a lesson in why cultural norms, even more than laws, are a determinant of prosperity and economic development. And tolerance is one of the more important cultural norms in this regard.

As Paul was giving us this lecture, I thought of my friend Bob Young's blog post about North Carolina's Amendment One, which seeks to ban same sex marriages. North Carolina is the only southern state that does not have such a law on its books. North Carolinans will be voting on Amendment One today.

Bob's argument is as much an economic one as a social one. Bob says:

This proposed amendment to our state constitution is specifically telling them we don't want their friends and fellow Americans to come here. We need these talented, intelligent young Americans to come to North Carolina to help our technology industries succeed, but they have choices. They can go to states with mottos like "Live Free or Die" instead of states that attempt to tell them how to live their lives, such as this Amendment One does. And trust me, these bright young Americans can and will chose to join my competitors in Seattle, or San Jose, or New York.

North Carolina has enjoyed a vibrant tech/startup economy and Bob's Red Hat and Lulu.com are two of its best known successes. Bob asserts that changing the cultural norms (and laws) of his home state are not going to be good for the local start-up scene. Bob is right and his concerns are consistent with the lesson that Paul Romer gave us yesterday.

Tolerance and Prosperity go hand in hand. History tells us this. I hope the good citizens of North Carolina listen to Bob because I agree with him strongly on this one.

Previously published on AVC.com