During my near fifty-year career, I have witnessed Louisiana’s economic status quo be battered three times by national and international trends. It has been as if we were puppets, being manipulated in a three-act puppet show.
When the Arabs employed their oil embargo weapon in 1973, Louisiana’s oil-dependent economy was damaged and Louisiana’s state budget was forcibly weaned from decades of dependency upon free-flowing petrodollars. When the Iranian crisis hit in 1979, Louisiana went into a downward economic spin from which we never fully recovered. A downward spin featuring the decimation of oil and gas companies that closed or migrated, taking other corporations, banks, and jobs with them. In their place, especially in New Orleans, the economy was forced away from the energy industry and embraced tourism.
And finally, following behind the dislocation of Hurricane Katrina, the Great Recession of 2008 overwhelmed an already-weakened Louisiana and we sank into an intra-state recession that lasted for the entire term of President Obama. It was this recession that gutted the Louisiana budget (the Fiscal Cliff) and ended with Governor Edwards’ massive spending and tax increases.
Three Acts of a dismal puppet show, forty years of economic slide through which Louisiana did nothing to re-structure itself to fit into the 21st century world’s economy. And now I fear that the curtain has gone up on Act 4. Once again powerful puppeteers are making the people of Louisiana dance to their tune. Once again, the people may pay the price for the folly of thinking that somehow the pre-1973 days will return, and with them prosperity.
I am not qualified to know whether the extreme measures being taken to combat coronavirus will be effective or are even necessary. That being said, we have placed our trust in experts and we, as a nation, are willingly committing ourselves to their draconian advice.
Will it turn out that they were right and by accepting the directions of these puppet masters we averted a medical disaster? Who knows. One thing is certain, this virus and the methods employed to fight it have ensured that the economy of the entire world will slip into a recession of untold depth and duration. Small business, cruise ships, and the hospitality industry in Louisiana are being forced to close and when they reopen, who knows if there will be any convention or personal tourism business left at all. And one thing I do know for sure is that an already depleted oil/gas-based economy will suffer dramatically unless the Saudis and Russians stand down and prices recover quickly.
Supply chains are collapsing, international liquidity of the money market has dried up, jobs are disappearing, companies may not survive.
In one month we have gone from perhaps the strongest economy in American history to one that is couched in the fear of what is to come. And we here in Louisiana may end up being dashed by the tempest that is fast approaching. It will hit us on three fronts; a national recession, a tourism-based intra-state recession, and finally, further crippling of what’s left of our oil/gas extraction industry. How long will it last? Well, it took nearly ten years from the 1979 Iranian crisis for New Orleans to morph into a smaller, but functional economy. And the state? The 2008 Great Recession blew a $1 billion hole in the state budget.
But in the end, the puppet masters of fate will grow weary and once again we will be left to our own resources. And as with every disaster, like a phoenix that arises from the ashes, comes an amazing opportunity to build something better than before. Even as the Saudis, the Russians, and the virus have had their way with us, we must be thinking about how we can become stronger, better. No one knows how long we will suffer the triple misfortune that is being visited upon us, but we must encourage our best and brightest to ignore the vicissitudes of fate and look forward to a time when we can turn misery to our advantage. A time when we will finally stop accepting mediocrity, when we set the bar high, when we demand our economic place in the sun.
The curtain of the 4th Act is rising. History will tell whether we recognized it as an interim disaster that led to long term prosperity for Louisiana’s people or we once again led slip a great opportunity dressed in terrible tragedy.