With only a few weeks remaining until the election, it’s still not clear
how Mitt Romney would manage our jobs crisis. There aren’t many lessons
from his term as the governor of Massachusetts — the economy was
comparatively healthy back then, and the unemployment rate was fairly
low. His current economic platform lays out broad principles (Principle
No. 1: Don’t be Barack Obama) but is light on specifics. All that’s
certain is that Romney has promised to use decades of business savvy to
create jobs, which raises the question: how do you apply business
strategy to a jobs crisis? No business views hiring as an objective.
When a crisis hits, the response of many executives is to let workers
go.
When I put this question to business analysts, several pointed me in the
direction of Louisiana, which has applied a number of Romney’s
principles. Its governor, Bobby Jindal, is a former McKinsey &
Company consultant who has focused on making his state more attractive
to businesses. Since taking office in 2008, Jindal helped cut antiquated
taxes (like those on certain factory machines) and streamlined
regulatory burdens (like lengthy permit processes). He and Stephen
Moret, his secretary of economic development (and another former
McKinsey guy), have also used state tax incentives in creative ways. A
few years ago there were virtually no video-game designers in Louisiana;
today, digital media is on pace to make up 5 percent of the state’s
economy. In 2011, according to Southern Business Development magazine,
Louisiana attracted more new business-development projects per capita
than any other state in the South. Its unemployment tracks below the
national average, too. Romney would presumably be encouraged by the
comparison.
I was surprised, though, when Moret volunteered that some of what his
state has done during the crisis cannot be applied on the national
level. State government can persuade companies to move to Louisiana and
prevent the ones already there from moving out. But that doesn’t have an
impact on the overall national employment picture. After all, Louisiana
can enlarge its slice of the pie, but it can’t make the pie bigger. “At
the state level,” Moret said, these policies are “perfectly
appropriate.”
Jindal has received praise from free-market advocates. Some economists,
however, argue that Louisiana’s robust economic growth suggests the
opposite point. After Hurricane Katrina
in 2005, Louisiana received a ministimulus in the form of billions in
federal dollars and insurance payouts that went into recovery projects.
It’s a quirk of economic measurement that rebuilding a destroyed city
can look the same as healthy economic growth. And while Moret argues
that Katrina spending mostly dried up before Jindal took office, many
economists contend that the benefits of any stimulus last longer than
the initial spending.
Regardless of whether this growth was achieved by a federal infusion or
conservative policies (or a combination of both), it is not necessarily
clear that it has even worked on a statewide level. Many of Jindal and
Moret’s highest profile projects focus on specialized industries, like
pharmaceuticals, renewable energy and digital media, which offer a
disproportionate number of jobs to already in-demand workers in
gentrified urban areas. The median wage for a software developer is more
than $90,000 a year, and new jobs are expected to grow at more than
double the national average and nearly four times the state’s average
income. Moret was eager to point out one recent success story — a new
G.E. software office in New Orleans. The facility, however, will largely
employ computer engineers, software developers and other
information-technology professionals. It’s unlikely to have much of an
impact on the city’s poorer residents.
Moret contends that growth, no matter where it starts in the economy,
will eventually effect everyone. “If we’re able to grow faster,” he
said, “you can have a surplus of tax revenue, without raising tax rates,
that you can invest in education.” But when I pressed him on how job
growth among programmers in Baton Rouge or engineers in the Garden
District would enhance the lives of the chronically unemployed in the
Lower Ninth Ward, Moret said, “We’re not there yet.” The state has
successfully recruited some manufacturing and call-center businesses
that employ high-school graduates, he said. These jobs, however, are
unlikely to reach Louisiana’s truly poor. “We haven’t done well enough
to see the reduction in poverty we’re looking for,” he said.
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