The Hayride

Today, Louisiana Gov. Bobby Jindal put out an op-ed piece touting Louisiana’s economic gains in an otherwise-rough year:

Reversing a decades-long trend of losing company headquarters, we have recently achieved a string of corporate headquarters wins. Albemarle Corp. moved its headquarters from Virginia to Baton Rouge, creating our fifth Fortune 1000 company. Superior Energy Services grew to become our sixth Fortune 1000 company. CenturyLink, the result of the merger of CenturyTel and Embarq, chose Monroe as its headquarters and will add at least 350 jobs over the next few years, becoming Louisiana’s third Fortune 500 company. In all, companies have announced moves of their headquarters or other significant operations from California, Georgia, Illinois, Oregon, Rhode Island, Virginia and Wisconsin.

Since taking office, we have secured economic development wins that will create more than 34,500 direct and indirect jobs, retain more than 15,500 jobs, generate at least $4.6 billion in new investment, and result in billions of dollars in new sales for small businesses.

National organizations have lauded Louisiana’s economic progress with improved rankings. For example, Southern Business & Development magazine named Louisiana co-state of the year for generating more significant business development wins per capita than any other Southern state. Louisiana secured its highest spot ever in the Forbesranking of Best States for Business, moving up five places. Forbes now ranks Louisiana’s economic outlook eighth best in the country. A recent Portfolio.com analysis determined that Louisiana performed second best in the country during the recession. Moody’s Economy.com recognized Louisiana as one of only 11 states already recovering from the recession.

The governor touts his efforts to recruit new business into the state, and he has certainly managed to achieve a bit more bang for the buck than did his predecessor, who was operating in the midst of a booming economy and had virtually unlimited resources with which to both structure a pro-growth state tax policy and lure out-of-state operators.

But elsewhere in the Baton Rouge Business Report’s pages, one finds some qualification for the governor’s successes. The magazine’s lead article discusses the loss of Baton Rouge-based IEM, a firm which does emergency-management contract work for state, local and federal governments, to the Raleigh-Durham-Chapel Hill research triangle in North Carolina. And Business Report editor J.R. Ball issues forth a protracted lament of IEM’s loss, grousing that the company’s high-tech and white-collar business profile is precisely what the Baton Rouge market desperately needs.

The articles by Ball and Business Report feature writer David Jacobs don’t exactly offer up a Chicken Little scenario for the state’s economy, and it’s fair to say the truth lies somewhere between Jindal’s cheerleading and the crying about IEM – or Raising Cane’s, the fast-food chicken franchise who made the decision a year ago to move its corporate headquarters to Dallas from Baton Rouge citing similar workforce concerns.

While Raising Cane’s and IEM have opted to move out, Albemarle and Bercen have moved in this year. And while this will be a view seen as counter to what is typically expressed in local media, Baton Rouge and Louisiana are getting the better end of that trade. Sure, you’d like to get as many companies’ headquarters locally as you can – but at a time when it is becoming obvious that a service economy simply won’t sustain itself in a competitive world market, companies like Albemarle and Bercen who actually make things people need are invaluable resources. Fast-food restaurants, even those as cool as Raising Cane’s, and government contractors are highly replaceable; should the most dire economic predictions about coming years prove true the resources for high-end government gigs will dry up nicely, while the restaurant business is dependent in large measure on disposable income (admittedly a fast-food chain like Raising Cane’s is somewhat insulated from a bad economy).

The intelligentsia in Baton Rouge and New Orleans, or at least what passes for it, has taken an opposite view. From the pages of the Business Report and the state’s other business publications comes a litany of pining for high-tech, white-collar, cushy jobs in sectors like filmmaking, computers, finance and, inevitably “green technology.” We’re told we must embrace “smart growth,” and particularly here in Baton Rouge we’re told that without such things as racial harmony and tolerance of alternative lifestyles – not to mention the promotion of a “vibrant” downtown, whatever that means – we won’t survive and prosper in the 21st century.

But the truth is that the 21st century won’t be any different than the 20th or 19th; at the end of the day if you want prosperity you have to create wealth rather than push it around. That means making things people need, which means industry. And basing one’s economy on manufacturing – which includes things like the petrochemical, refining, industrial construction and similar sectors – is an extremely sound strategy. In fact, it’s because Louisiana’s economy is grounded in the production of real goods that we have escaped the worst of the current economic disaster. We didn’t have a real-estate bubble, we’re not associated with high finance and we’re not driven by luxuries or other products and services catering to big spenders (outside of New Orleans tourism).

The Baton Rouge economic development crowd has for years pined for the city to become the next Austin or Charlotte, and certainly there are lots of elements of those cities’ successes that Louisiana should emulate. But while Jindal seems, and correctly, to be pursuing economic development on a wide front, the attraction of industrial operators as he’s successfully doing looks like the best strategy; if North Carolina and Austin can build high-tech communities based on computers and technology, there is nothing wrong with Louisiana serving as the broad shoulders upon which the nation depends for vital goods.

Ah, the argument goes, but you can’t manufacture anything in the United States; it’s too expensive to do it here compared to China, Brazil or India, etc. To survive we need to have all the high-tech jobs creating the products the worker bees in the Third World ultimately produce. In other words, the DVD’s with the video games might be stamped in Malaysia but the software engineers are in San Jose and that’s what matters.

Perhaps there is truth in that – but there is also disaster. And America’s decline in manufacturing, which has been to a large degree oversold until very recently, has occurred mostly in union-dominated states in the North. Take the car business, for example; Michigan and Ohio have seen manufacturing jobs wiped out in droves as union-oriented GM and Chrysler have taken a beating, while Mississippi, Alabama and South Carolina have prospered with non-union jobs building cars for Nissan, BMW, Mercedes and others. Louisiana is well-poised to claim our share of the next round of non-union manufacturing growth when it does come.

Of course, more work needs to be done to prepare Louisiana for an economic boom. The state’s tax policies still take too heavy a toll on business, the state still has far too many government employees and too much waste, the state’s primary and secondary educational system needs to be torn down and rebuilt and something needs to be done about a budgetary system that forces draconian cuts in higher education, particularly to the state’s flagship university, every time an economic slowdown takes a bite out of Louisiana’s treasury.

But Jindal’s efforts have helped reverse Louisiana’s loss of jobs to other states. Unless federal policies like the EPA’s attempt to regulate carbon dioxide by fiat destroy us, it will be the traditional, solid industries our economy has traditionally been based upon can dependably generate a recovery in the coming years which greatly outstrips the national rate of growth.

Filed under: Baton Rouge, Bobby Jindal, Economy