In his farewell tour, Gov. Bobby Jindal first visited two businesses in Shreveport and Monroe, focusing on his record in economic development.
Those visits have implications for Gov.-elect John Bel Edwards as he seeks to shape state government’s relationship with business and industry.
For Jindal, the visits to a steel company in Shreveport and the telecom giant CenturyLink in Monroe sought to draw attention to his support — with the taxpayers’ money — of new or expanding businesses in the state. The state’s economic development efforts were headed by Stephen Moret, who has now left for LSU, and his deputy and successor Steven Grissom. Both came from the Baton Rouge Area Chamber, where Moret was president before heading into the Jindal cabinet.
While Moret emphasized that incentives for companies were always carefully calculated to bring the biggest bang for the buck for Louisiana, the lavishness of corporate welfare has gotten a bad name. Even Jindal used the term “corporate welfare” in calling for cutbacks in some tax benefits for business in this year’s session of the Legislature.
There is an important distinction between the incentives for new companies and the broader tax breaks lavished on businesses during Jindal’s terms; the one is a targeted payment, while the others go to categories of businesses. Often enough, the terms of the latter are so cleverly drawn by a Legislature dominated by business interests that the distinction is lost.
The larger reality is that incentives have become a corporate entitlement. Companies ruthlessly extort big benefits from State A and then use them to leverage State B into writing a bigger check. It’s a lesson from “The Godfather” movies: A lawyer with a briefcase can steal much more money than a thug with a gun.
In economic development circles, though, the taxpayer victims of these acts of extortion are supposed to feel good about it.
As with most transition committees, Edwards’ panel on economic development includes many representatives of the status quo, but the governor-elect’s statement on their deliberations represents a striking change: Let’s focus on the quality of our workforce, research and development in universities, education for the next generation of workers.
“Louisiana is open for business, but we cannot simply rely on costly tax incentives to spread this message,” Edwards’ statement said. “Louisiana has always had a strong workforce, and we need to ensure this workforce is attractive to diverse industries, while also responsibly incentivizing business and industry to invest in our state.”
This goes against the grain in economic development, if not approaching fightin’ words, but it represents a dose of common sense.
Every state and city can duel in a race to the bottom to give away money. And there’s been a legitimate argument that Louisiana’s out-of-date and inefficient tax code has to be “adjusted” by long-term incentives that reduce the money to the Treasury. That money, though, is needed to build better schools and colleges, fund workforce training, fix roads and bridges. Those are the goals in a long-term strategy for growth.
Edwards did not suggest Louisiana unilaterally disarm in economic development giveaways. He wants “a plan that is mutually beneficial to the citizens of Louisiana and industry.”
Edwards is putting new and needed emphasis on what Moret stressed at his BRAC post. Economic development may involve incentives and salesmanship but equally important — if not more so in Louisiana — is what Moret called product development. What are we selling?
Louisiana’s incentives have been lavished, as in most states, on big out-of-state corporations. Many of them would have come here anyway for the Mississippi River or our pipelines and railroads, our willingness to host industrial facilities that some places object to.
We need better product development, not just writing checks.
What will be interesting is whether the governor-elect’s policy can be enforced not only in state government, where “this is the way we do things” is Holy Writ but in a corporate culture that is used to “incentives” that are essentially free money to the bottom line.
Lanny Keller is an editorial writer for The Advocate. His email address is email@example.com.