As leaders
of Together Louisiana and our local, constituent organizations, we are well
aware of the power of narratives. We tell stories as part of every public action.
We know that our individual stories come together to form a larger narrative, a
perspective on reality that is bigger and stronger than any one of us. Narratives
guide our collective action.
Narratives
also guide policy making by government at all levels. Today we are interested
in the narrative of “economic development.” It is a narrative we do not
currently control. It is a narrative we must change in the State of Louisiana.
So let me
lay out two facts to hold in the back of your mind as I talk about economic
development narratives.
Fact #2:
Louisiana remains near the bottom of national rankings of states in which to do
business. In CNBC’s 2016 analysis, states were evaluated on 10 dimensions drawn
from a diverse array of business and policy sources and government agencies.
Louisiana ranked 44th of 50 states. In Forbes magazine's analysis, Louisiana ranked 40th of 50 states.
Something’s
wrong with this picture. If corporate subsidies in the form of tax cuts, tax
exemptions and tax refunds are the key to economic development, why aren’t
businesses and industries stampeding our borders? Why do we still rank so
poorly as a place to do business?
Or, a
question I posed to an elected official a few months ago, “Where are the jobs?
If ITEP is an incentive to create jobs, where are the jobs? Given the
generosity of Louisiana’s ITEP, we ought to be up to our eyeballs in jobs. We
ought to have two jobs per person in Louisiana!”
For just a
fraction of a second, that elected official was speechless. And then he said,
“You’re right.”
The way we
are doing economic development in Louisiana is not working! But there is an
alternative. First, I’ll lay out the thinking that currently guides economic
development in Louisiana and has for a long time, then I will discuss the
alternative model we propose.
The
dominant economic development narrative in Louisiana goes like this:
First,
economic incentives in the form of tax cuts, exemptions and various give-backs
are necessary to attract business and industry to the state, create jobs and
generate economic growth.
So far, so
good. We agree. We understand that to be competitive, Louisiana must offer
economic incentives to business and industry.
Second,
the story continues, “And just look at what wonderful companies we are. We
employ hundreds of Louisianans, our employees do volunteer work in their
communities, and we support charitable causes with corporate donations.”
And, yes,
we appreciate the volunteerism, the corporate support of charitable causes, and
the jobs industry provides.
But at
this point we must begin to ask questions: ITEP is designed to attract new
business and industry to the state and create new jobs. How can it be used to
reward corporations for good behavior? How can it function as an incentive when
it is used as a gift to those who are already here? What are the long-term
consequences of converting an incentive into a reward for… what? Corporations
doing what they ought to do anyway? Being responsible, reinvesting in their own
business? Why must that be rewarded?
Here’s
where the dominant economic development narrative takes a bit of a nasty turn. There’s
a third piece to the story, and it is often hinted at rather than spoken
openly. It goes like this: Keep the goodies coming or we’ll pack up our jobs
and leave town. We’ll take our jobs elsewhere.
In fact,
this is irrational. There’s no place to go with better tax exemptions
and other forms of corporate welfare than Louisiana. As we well know, Louisiana
has the most generous ITEP and the most overall generous corporate subsidy in
the country.
Rather,
this part of the narrative works its magic on a purely emotional level. It’s a
kick in the gut. It doesn’t have to be said out loud. The implication is all it
takes to frighten people who need and want jobs, and it scares the living
daylights out of local elected officials.
So that’s
the dominant “economic development narrative”: Subsidies must be offered to
attract business and industry. The corporations thus attracted make great
contributions to our communities, not only in the form of jobs but in volunteerism
and corporate charity. Therefore, the subsidies must keep coming, the pot must
continually be sweetened, or business and industry will pack up and leave.
The truth
is, taxes and/or lack of subsidies are not why corporations move. It is rarely a
factor.
Remember
those analyses of the overall climate for doing business by state I mentioned
earlier? Taxation and corporate subsidies aren’t even a separate factor in the
analysis! They are presumably part of the “cost of doing business” factor, and guess
what? Louisiana stacks up very well on the “cost of doing business” scale;
we’re 7th in the country in both the CNBC and Forbes magazine analyses. In other words, just 6 out of 50 states
are cheaper places to do business than Louisiana.
What does
contribute to Louisiana’s low ranking overall as a place to do business are
things like “quality of life,” where we ranked 47th in the nation in the CNBC analysis and 48th in the Forbes analysis.
Louisiana ranked 46th in overall economic strength in the CNBC analysis and 44th in the Forbes analysis.
So the new
economic development narrative we propose to Louisiana is this: Invest in
us, the workers of Louisiana. Make us the best workforce in the country. Invest
in our institutions of higher education; relieve the overbearing workloads and
lack of support staff our faculty labor under and they will do the research
that leads to innovation and improving technology.
Invest in
our infrastructure, which is, after all, one of the first requirements for
doing business. Enable police juries and school boards and sheriffs offices to keep
enough of their local taxes to get the job done. To fix roads and bridges,
because you can’t run a productive business if workers, suppliers and clients
have trouble getting to it. To improve water supplies. To clean out drainage
ditches so the south side of Monroe and the neighborhoods of Baton Rouge don’t
flood with every heavy rain.
Invest in
intellectual and cultural capital. Make sure all of our kids have equal access
to quality public libraries. To after school and summer school programs. To reading
programs that will ensure they make that 3rd Grade tipping point
transition in their ability to read—the transition that decades of education
research tell us is the best way to keep them out of jail.
Invest in
essential job skills programs, like NOVA in Monroe, that takes people who are
under- or unemployed, whom the education system has already failed, and moves
them into living wage jobs with a career path and benefits. In short, invest in
the workforce today’s business and industry requires.
Invest in
keeping our cities clean and our citizens healthy. Invest in us, and Louisiana
won’t have to give away the ranch to get business and industry to come here.
We are
thankful for corporations that do business in Louisiana, employ our people and
contribute to our communities. But we want the ITEP to do what it was designed
to do: Attract new business and industry to the State, create new, quality,
permanent jobs.
It can
only do that if it is used as an incentive and not a mere reward for good
behavior. We invite our corporate neighbors to join us in paying our fair and
reasonable taxes, and in making Louisiana the best state in the country in
which to do business by investing in us.