Jindal puts Ideology before Facts (Yet Again)

When I first moved down here to New Orleans I went through culture shock on many levels.  I came from places where there was no viable private education because public education is so excellent that private schools are reserved for the hyper-religious or the hyper-rich with hyper-idiot children.  I was used to good roads.  I can’t tell you how many tires I’ve lost to the roads down here.  I was used to low crime and nearly zero drug-related crime. I was also used to cities with corporate headquarters (Minneapolis, Kansas City, and Omaha) where I could make a nice living consulting.   I’ve come to love it down here although I still realize we’re very third world compared to the rest of the country(at this writing anyway).  I’ve just learned to relax and go with it.

Louisiana has always depended on the kindness of other states since the fall of the Oil and Gas industry in the 1980s.  It has been highly dependent on the rest of the country and the world since Hurricanes Katrina and Rita devastated the bottom and richest part of the state.  One of my displaced friends got a US government supplied  FEMA trailer on campus.  He got his dishes, pots and pans and linens from the Kingdom of Saudi Arabia.  We’ve relied heavily on outside help since that awful day in August, 2005.

I know several economists here in the state that follow the local economy closely and I know we’ve had some real tough times.  Fortunately, we still have two major news organization that are committed to following our recovery and they send reporters down here to do substantive stories as well as the usual “let’s traipse around the ninth ward and see what’s happening”  pieces. This generally keeps the light on the problems.   Our governor also attracts attention as a potential leader of the Republican Party.  I’ve written about him frequently because I’d frankly like to have him some place where he cannot do so much damage to folks with his inability to separate right wing dogma and religious zealotry with governance.  (I’m thinking Spaceship, co-pilot Rush,  and Mars.)

Of course you’ve seen Bobby (Peyush) Jindal on TV now.  You can see he talks very fast and often in ways that really don’t make sense.  He’s got a very interesting background and is known for being intelligent and well-educated.  He never lets that get in the way of his governing Louisiana, however.   You can read more on that from a December post of mine here.

Today’s NY Times had a story that really interested me on many levels.  It’s called Louisiana, a Test Case in Federal Aid.  I’m going to couple that with the findings of Vigdor (2008) from the Journal of Economic Perspectives.  The study was published in the Fall 2008 and was entitled The Economic Aftermath of Hurricane Katrina.  The NY Times article considers the level of government stimulus put into Southern Louisiana and the resulting impact on the economy.  This is a relevant topic because it somewhat mimics the idea of putting major stimulus into our foundering national economy.  It is also of interest because it’s a pretty good example of a Governor–who for ideological reasons–was posturing about turning federal money down and continues to grandstand against federal aid in general.

So what are some of the facts brought to light in both of these articles? This from today’s NY Times.

Years before Washington spent $787 billion on a national stimulus bill, it staged an unintended trial run in Louisiana, a huge injection of some $51 billion for which historians find few, if any, precedents in a single state.

The experiment is still playing out, but some indicators suggest that what occurred in Louisiana — dumping a large amount of reconstruction money into a confined space in the three and a half years since Hurricane Katrina — has had a positive outcome. The state’s unemployment rate of 5.7 percent in February was considerably below the national average of 8.1 percent, and it was the only state to see a drop in unemployment from December to January. It was also the only state with an increase in non-farm employment in February.

State economists specifically mention what one called “the ongoing building boom” from federal dollars as a main reason for the numbers. Largely a result of the damage caused by Hurricane Katrina, construction projects have not dried up as they have elsewhere, and a few can even be seen in downtown New Orleans.

Construction has “really hung in there and done very well,” said Loren Scott, an emeritus professor of economics at Louisiana State University. “In most states construction is way down, but in ours it has been up.” The relatively low unemployment rate in Louisiana “tells you that the stimulus can have an effect,” Mr. Scott said

The state’s February 2009 unemployment rate is 5.7% which is way below the national average at the time of 8.1%  Construction employment continues to rise from a level of  135.4  to a level of  in 143.9  February 2009 (number of jobs, in thousands).  The 12 month percentage change in construction employment in Louisiana is an increase of 8.2% over 12 months.  The February numbers are preliminary and seasonally adjusted.  All nonfarm employment over a 12 month period is up by .3%  (12-month % change).  This hardly resembles the rest of the country. Job losses have minimally occurred in only several areas: manufacturing, information, and financial, and transportation and utilities.  These would all be typical of minor recessions.

While Governor Bobby Jindal has been attending Republican events extolling the evils of economic stimulus, even his appointees have to admit, Louisiana has benefited from Federal largess.  Again, from the NY Times:

In Louisiana, however, the consequences have hardly been dire — just the opposite, in fact. One of the governor’s leading aides, the state’s recovery director, Paul Rainwater, praised the federal relief effort in Louisiana in recent remarks to Congress, the day after his boss scorned federal help on national television in the Republican Party’s response to President Obama’s first address to Congress.

“No other state in the nation has been blessed with such generosity from Congress and the American people,” Mr. Rainwater said.

Referring to the Federal Emergency Management Agency, a principal conduit for the aid that has flowed here, he said that “Louisiana is FEMA’s biggest ‘customer,’ so to speak, and the state’s Office of Facility Planning and Control is the largest single public-assistance applicant in American history.”

In the preceding 18 months, some $25 million a week had been given out in the public-assistance program, which helps local governments rebuild vital facilities, among other functions.

Over all, Mr. Rainwater said in an interview, $10 million a day was spent in the state in 2008, enough to draw contractors from around the country. In the last two weeks alone, he said, the state helped open six new apartment complexes, five of them in New Orleans.

“You take 10 million a day you didn’t have otherwise in your general fund, you can generate a lot of energy in your economy,” he said.

Vigdor (2008) has an interesting set of statistics showing the differences between pre- and post-Katrina New Orleans.  The city lost a substantial number of people (approximately 200,000) and homes  (approximately 106,000).  The interesting thing about these statistics are that they are coupled by both wage gains and housing price gains in the area.

Several independent pieces of evidence indicate that across the metropolitan area, the Katrina-induced reduction in the supply of labor outpaced the reduction in demand.

…

Average weekly wages paid by firms located in the metropolitan area derived from quarterly filings to the unemployment insurance program increased by 21 percent between the second quarter of 2005 and the second quarter of 2007- more that twice the rate of increase posted in the nation as a while.  The rate of increase was even higher among firms located in Orleans Parish.  Current Population Survey data confirm that worker experiences in the post-Katrina New Orleans labor market have been relatively favorable.

Again, that’s been coupled with increasing house prices that is ongoing, unlike many parts of the country.   This has come from a combination of losing so much housing stock during the storm, but also the invigoration of housing stock due to the Road Home Program.  There has not been as much Federal money pouring into the rental markets so  the city has a considerable number of rental units that are still uninhabitable.  This has been changing recently.  If you drive around the city, you’ll see a swell of buildings with affordable housing going up all over the city. I just recently attended a hearing for a complex to be built on a lot near the French Quarter that’s been empty for decades.  This is not the kind of hearing you’ll attend in other cities around the nation.

This creates an interesting paradox for the governor who doesn’t seem to connect reality with his rhetoric.  It  is clear on the state level that rebuilding and recovery would not have been possible without the incredible amount of Federal Aid.  It is also obvious to many of us that we’ve got a fairly healthy economy because that aid keeps coming.  We’re not experiencing the recession the way other states are because we’ve been shovel ready since September 2005. Governor Jindal initially spoke of eliminating the income tax based on the incredible inflows of money to parish, state, and municipal coffers from FEMA yet he wanted this year to turn down tons of Federal Aid.   How can he say that the Federal Stimulus will do nothing when the evidence that his position is just plain wrong sits right under his nose.

Never let it be said an ideologue ever let the facts get in the way of their judgment.

New Housing in the Holy Cross Section of the Lower 9

I take a walk near the Levee in the Lower 9 about 6 weeks after Katrina