APPEL: Don’t Be Shocked To Hear It, But The DXC Economic Win Was Overrated

What were those talking points he used? They went something like this; DXC is the biggest economic win in Louisiana history. He needed to make that claim, no he HAD to make that claim. His problem was that other than the major economic wins of his predecessor he had little else to brag about. So over and over we heard how this was a precursor to great things. But as I watched Gov. John Bel Edwards crow about his economic development prowess I couldn’t fathom whether he just didn’t get it, or much worse, he did get it but just ignores it.

We can’t build prosperity for our people by electing leaders whose approach to economic prosperity is the equivalent of putting lipstick on a pig.

Now it has been announced that DXC Technologies has missed its hiring and payroll targets and will be forced to pay back to the state millions of incentive dollars. It is a sad thing that the people of New Orleans have not seen the jobs or salary levels promised by the governor. Perhaps the company will grow as expected and all will be well, but if history is prologue it will never achieve the folly of political promises. Once again DXC highlights the absolute fantasy of trying to use massive public funds to cover up a defective economic climate to make it somehow attractive to business. It illustrates the poverty of legitimacy that has been sold as good leadership to a people who desperately want to believe it.

During Bobby Jindal’s terms he used a strategy of immense public support to attract capital intensive, low employment industrial plants. This strategy worked but not for good economic reasons. The strategy worked because the nature of these plants is such that they can be profitable when the state pays just enough to offset the penalty that it costs them to be in Louisiana. The existence of other factors such the availability of large volumes of cheap natural gas and direct access to export markets had made us attractive, so by paying down the Louisiana penalty they could be profitable. But this strategy only works for certain types of industries. Jindal was never able to attract high employment manufacturing because Louisiana’s social, political, education, and legal costs are so high that no amount of public finds could make these companies profitable.

When John Bel Edwards came to office he blindly just continued Jindal’s strategy, meeting with minor success by basically buying the same relatively low employment business for Louisiana. But just as his predecessors, what he has been incapable of understanding, or worse does understand but refuses to tackle, is that Louisiana’s social populism is an overwhelming obstacle to business growth or in-migration. The result is that high income jobs go to other states that maintain economic climates that foster prosperity for citizens as a function of a profitable business sector.

The cold fact is the only long term way to attract prosperity-bringing jobs is to fix what is broken. Either we make Louisiana’s political, social, and economic climate competitive or we will stay mired at the bottom of all things good.

Sadly, for many reasons, the people haven’t been willing to accept this cruel fact of economic life. Let’s look at the recent election. The issue that was of the greatest personal significance to the average voter was the astronomically high cost of automotive insurance; cost that results from a legal system tilted toward the legal lottery promised by TV trial lawyers. The impact of such high insurance cost, especially on poor people, alone would in other states have brought down a pro-trial lawyer governor. But not in Louisiana, where through a skillful application of fear and jealousy he was narrowly re-elected.

More impactful to the state as a whole, yet not obvious to most voters, was the message that his re-election sent to the business world. A fair legal structure, the same fair civil justice system that would lower insurance costs, is one of the main metrics that business looks to when making growth or location decisions. But the message voters sent to business by re-electing a trial lawyer governor was, don’t come to Louisiana because even though we know we are a Legal Hellhole, we keep electing leaders who won’t face up to difficult challenges.

History absolutely is prologue. Among many others, we have experienced a pro-forma or a total failure of IBM in Baton Rouge, Bell Helicopter in Lafayette, GM in Shreveport, Gameloft in New Orleans, and now maybe DXC. These firms came to Louisiana, not because of a good business metrics, but because they were attracted by lucrative incentives. History also tracks the steady departure from New Orleans of oil and gas, maritime commerce, banking, and all forms of other corporate businesses. Those businesses, never receiving massive incentives, left simply because they could not justify being in Louisiana or New Orleans without the ability to be profitable.

If we want to end so many ills of our society, the cycle of poverty, failed education, lack of opportunity, societal issues, then we will have to embark on a different path. That day will arrive when our people have finally had enough and they reject the allure of just putting lipstick on our pig. That day will come when our people finally face reality by selecting leaders who won’t tell them that all be well if we just elect them to keep doing the same things. That day will come when we finally abandon using massive public funds to attract business in order offsetting the high cost of just being in Louisiana and instead fix our fundamentals.

Doing the same things over and over is not only insanity, it is absurd!

We are stuck in political limbo for the next four years, but we can use this time beneficially if we prepare for the future by developing a pro-growth, prosperity strategy that we can implement after the next election. As important, we should spend our time cultivating a leader, no matter the Party, who won’t just tell us to choose a better lipstick color!

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