Let’s Have A “Tesla Test” For Louisiana’s Politicians

Over the last few days you’ve probably noticed that Tesla CEO Elon Musk, who’s been one of America’s most visible entrepreneurs over the past decade and change, seems to have been red-pilled over the Wuhan coronavirus response in his home state of California. Musk has popped off on Twitter several times about California’s nanny-state government and its restrictions on business operations.

And as a result of those complaints, Musk got a brushback pitch on Twitter from Lorena Gonzalez, the Hard Left Democrat assemblywoman from the San Diego barrios who up until now was famous for authoring AB5, the bill which essentially destroyed California’s gig economy.

Gonzalez tweeted “F Elon Musk,” which brought this response…

And Musk is now saying that he’s getting out of California as fast as he can…

Tesla CEO Elon Musk said on Twitter Saturday that the company is preparing to file a lawsuit against Alameda County and will move its headquarters and future operations out of California.

On Friday, Alameda County’s interim public health officer, Dr. Erica Pan, said that health orders to contain a Covid-19 outbreak in the region are still in place, and that Tesla does not have a “green light,” to resume vehicle production at its main U.S. car plant in Fremont, California, yet. She also noted, “We have been working with them, looking at some of their safety plans, and have had some recommendations.”

Tesla had wanted to start production again on Friday afternoon. The plant is where the company makes vehicles for Europe and North America. The company’s headquarters are in Palo Alto, not part of Alameda County.

Unlike other automakers, Tesla’s employees are not part of a union, so it would be easier for the company to significantly alter its operations.

The two states that Musk is talking about relocating his headquarters to are Texas and Nevada. But while it might be an extreme longshot that he’d consider moving to Louisiana, the Bayou State needs to think of itself as a competitor for his business.

Let’s call it the “Tesla test.” What does Louisiana need to do in order to make itself competitive, favorably so, that Musk or the next guy like him would want to have his headquarters here?

There is no question but that Louisiana miserably fails the Tesla test as of now. This is known. But what’s also known, particularly given yesterday’s projections of a billion-dollar shortfall in Louisiana’s budgetary future, is this state’s current way of governing itself fails another kind of test – the test of a viable future. When your entire economy rides on hospitality and tourism in New Orleans, and oil and gas everywhere else in the state where there’s an economic pulse, something like COVID-19 can come along and wipe you out even more effectively than a hurricane can.

We’re dead in the water right now. But because we are, we have nothing to lose in making radical changes to our approach to business and governance.

Yesterday in the House Ways and Means Committee at the Louisiana capitol, there was a lively debate over a resolution that would suspend severance taxes on oil and gas until prices rose to a certain level – a number which will likely be adjusted several times before passage, such that it isn’t even important at present. The resolution passed out of the committee easily, but what was on display during the debate was the brain-dead mentality of many of Louisiana’s legislators and governmental special interests which would so completely fail the Tesla test.

One after another, these people opposed suspending severance taxes by demanding to know what it would cost state and local governments to suspend them. The answer, given current reality, is nothing – you can’t get severance taxes unless someone is actually producing oil and gas in the state. Right now practically every well in Louisiana is either shut in or on the way to it in the next few weeks, because there’s a massive glut in the oil supply and what oil is being produced can be produced more cheaply and profitably elsewhere.

The point being that Louisiana’s state and local governments can’t count on any severance tax revenue over the short term, or at least not much. What you’re hoping for is that the entire industry isn’t lose altogether, because when it goes it takes tens of thousands of jobs with it. All those oilfield service companies, industrial pipe manufacturers and so forth aren’t going to have their headquarters in Lafayette or Houma when what oilfield activity is going on is in Texas or North Dakota or Oklahoma or New Mexico. And yes, all of those places are suffering because of the oil glut, but the point is that while Louisiana’s legal environment and severance tax scheme are less competitive than those other states, their oil and gas industry will come back long before ours does.

One of the Democrats on the committee, state representative Melinda White of Bogalusa, actually said that so long as Louisiana has oil the oil companies will be here. That’s the kind of mentality which utterly fails the Tesla test and it has to be scrubbed out of that capitol if Louisiana is going to survive.

Here’s another example, from a comment thread on Facebook yesterday while the debate on that resolution was in progress…

Jan Moller runs the Louisiana Budget Project, which is a left-wing outfit engaged in endless public policy advocacy.

You simply cannot have this mentality and attitude that the government’s revenues and redistributive fiscal endeavors must take precedence over the state’s market economy if you want to survive. The global economy is in the dumpster at present because of the virus, but it won’t stay that way, because when the virus is gone, and it’s receding into the woodwork as one more thing which is out there (as is the flu, which you’re not supposed to compare the Wuhan virus to but as an economic factor the two are destined to be very similar), the fundamentals of the economy will remain as they were before all this got cranked up.

The major difference being that the virus, and the government response to it, has turned a whole lot of people and businesses into free agents. Musk and Tesla are a perfect high-profile example. And if you fail the Tesla test, you fail the Boudreaux test and the Smith test and the Garcia test, too. You lose out on free agent people and businesses across the board, and in doing so you lose out on your future.

Louisiana can’t afford to operate as it always has, and it can’t afford to act as though it can take its people and economy for granted. The world is changing, and the stupid mentality persisting in our public sector had better change with it or else there will be nothing left to tax.

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