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Jindal's economy beats Edwards', redux

Welcome to the party popping the overinflated balloon that is the campaign narrative of Democrat Gov. John Bel Edwards.

Last week, appearing here was a comparative analysis of Louisiana’s economic performance from July of 2008 to May of this year, neatly segmented into three periods. The first essentially occurred during the first term of Republican former Gov. Bobby Jindal, which featured early tax relief and throughout a significant reduction of government spending of dollars from state revenue sources. The second, roughly analogous to Jindal’s second term, saw tax increases late in it and incrementally higher spending during it. The third comports basically to Edwards’ time in office, marked by substantial tax increases and significantly higher spending.

Using data showing the state’s absolute performance and ranking among the states in each period, the first Jindal term produced much better economic performance than his second, which in turn did little better than Edwards’ reign. In short, Jindal’s initial policies, the exact opposite of Edwards’, demonstrably made Louisianans better off than they have been under Edwards’ watch.

Now comes along the Baton Rouge Advocate, with a piece that more clumsily shows the same. Reviewing the 2008-15 period to 2016 and beyond, it concluded that Louisiana’s economy incrementally improved on some indicators since 2015 but deteriorated according to others, and definitely fell behind the rest of the country as well.

Their data didn’t as well capture the exactitude of the comparison, because they (somewhat lazily, but understandably because they’re journalists, not policy researchers) used annual, end-of-year numbers. As I noted previously, better is to use second quarter data, because a governor’s real stamp comes from the budget he permits – guided by tax policy that he endorses – which begins at the start of the third quarter.

(Of course, even that approach may not entirely make exact distinctions. For example, the first tax increases under Edwards took effect at the end of the first quarter of 2016, but it’s a very good proxy for spending decisions.)

Also, the Advocate story didn’t segment the Jindal era and present statistics that way, making comparisons murkier since fiscal policy of Jindal’s second term resembled more closely that of Edwards than of Jindal’s first term. (Of course, the article’s point was comparing the two eras in the context of campaign communications, not to make policy reviews.) The shortcoming of that approach became evident when discussing the impact oil prices may have on the state’s economy.

A bit much gets made of the impact of the extraction economy in Louisiana – although constituting a much greater proportion of the state’s economic activity than in most, it still accounts for only 15 percent of jobs – but it does have some significance. Reviewing average prices using the time periods defined above, the average Illinois crude barrel (inflation adjusted) came in during Jindal’s first term at $75.17, his second term at $70.01, and for Edwards’ three years at $48.22.

If looking at Jindal’s era as a whole, using these data Edwards’ supporters could allege (again, if we make the questionable grant that the extraction economy has a significance beyond its actual impact) the worse performance under his watch was due to lower oil prices. But that conflates the two very different Jindal terms. Indeed, that economic performance weakened considerably during Jindal’s second term in the pursuit of a different fiscal policy from the first while oil prices didn’t change much, and that prices changed significantly from his second term to Edwards’ while economic performance became a bit worse following largely the same policies, points to the small impact that the extraction economy has and the much larger impact that policy choices have on a state’s overall economic performance.

The article fumbled somewhat when it trotted out an economist to declare that presidential actions somewhat affect the economy while gubernatorial ones don’t do much. It’s true that Louisiana’s economy is but two percent or so of the nation’s as a whole, but policy does matter, especially over time. Something – policy choices – must explain why Louisiana outperformed the country marginally during Jindal’s first term, then during his second term underperformed even as oil prices hardly changed, and then became even worse under Edwards’ watch.

Policy differences also explain why, in following very different fiscal policies for decades, Louisiana’s neighbor Texas has emerged much stronger economically. Dismissing the economic performance of a state largely as a random walk swamped by other factors is intellectually lazy and fails to see the world as it really is.

Policy choices matter in the economic well-being of the citizenry, and governors deserve credit or blame for how they shape these. Both my post and the Advocate’s story demonstrate that Louisianans today are worse off economically under the policy preferences Edwards backed than they were under Jindal’s agenda.

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