The Tyranny of Low Unemployment in Louisiana

by publius

The fight over the stimulus – a preview of the budget wars to come – has obviously taken on larger ideological dimensions.  And the stakes are high.  It’s a fight over the very idea of whether government can play a positive role in people’s lives.  That’s in part why the Republicans are fighting it so hard.

The ideological debate is often taking place at a very abstract level – with anti-government advocates warning of vague unspecified dangers that will follow government spending.  Last month, for instance, Jindal said in a speech that increasing spending “will have dire consequences for not only this time, but also for the future of America.”

It’s nice, then, to see some actual concrete vindication of government assistance.  And it’s especially nice to see it in a state governed by Bobby Jindal.

The NYT reports that the massive post-Katrina relief effort has – shockingly – helped the people of Louisiana a great deal. 

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.

The articles adds that, unlike most states, construction is up in Lousiana – which will create its own ripple effects. 

Somewhat hilariously, Jindal’s “subordinates” aren’t exactly on-message either – perhaps because they’re putting the needs of their state above sculpting an ideological image for national consumption in the GOP primaries.  These officials are continuing to request federal money for projects like new hospitals.  And the day after Jindal’s “Kenneth the Page” speech, the state’s recovery directory thanked the federal government for its post-Katrina generosity.

I’m not saying this settles the debate.  But it does show that government can play a significantly positive role in people’s lives. 

And it reinforces a much larger point -- people like me prefer certain types of government spending because it helps people.  It’s not much more complicated than that.  I think national health care, broadband investment, and energy reform will help people. 

And to help the public come around to that view, it’s important to advertise the successes of government done right – to show them the benefits.  Democrats don’t do enough of that.

Comments

[Slartibartfast]

Interesting, publius. Are we now doing enough in Louisiana, do you think? Because just a few months ago, we were falling tragically short.

[Gherald L]

Few would argue that government assistance is not a good thing in emergency cases like Hurricane Katrina. More like Jindal argue that it's bad during recessions, and this is contestable.

But I do think the case is clear that over the long run and during normal economic times, intervention is harmful. For instance some economists are asserting a cause and effect relationship between western aid to Africa and its poverty rate increasing from 11% to 66%.

publius and progressives want government to help people. I quite understand the emotional impulse. But the "unspecified dangers", i.e. unintended consequences of the state moving money/resources around to name winners and losers, have turned out to be sadly real over the years.

I fear the increased domestic spending in Obama's budget -- the most progressive in 40 years -- is going to have harmful post-recession consequences, just as LBJ's Great Society programs have been done more harm than good.

That's not me throwing an ideological tantrum, it's just the best I've been able to determine from personal observation. To the best of my knowledge the country did better under Reagan and Clinton than it will under neoprogressivism.

Basically the road to hell is paved with good intentions.

[Gary Farber]

"...just as LBJ's Great Society programs have been done more harm than good."

This isn't so. The poverty rate went down after the Great Society. (We just discussed this, with lots of cites, last month.)

Were there problems with some programs? Yes. Did the programs overall do lots more good than harm? Yes.

[liberal japonicus]

There is another angle to this, and that is that growth has been for the large number of people who have moved into the area rather than for the long time residents, who have either relocated, or are not benefiting as much from the 'surge'.

The lower Ninth Ward, which didn't have potable water for at least a year after Katrina, is probably what you are thinking about when you discuss stories about the reconstruction not going well. This CNN video points out the following
-95 percent of Lower Ninth Ward clinic's patients have no health insurance
-While most of the debris from Katrina is gone, area still abandoned wasteland
-City's demographics changing

This is an interesting paper about the Ninth ward and its history

[byrningman]

To be fair to the anti-government POV, I don't think they argue that government money has no impact. Clearly, if the government spends a lot of money in Louisiana or wherever on construction and so forth, we will see consequences. The argument is that this is a comparatively inefficient endeavour, and one that impedes the growth of more efficient economic activity.

[RepubAnon]

I think Governor Jindal is referring to the terrible consequences inherent in letting poor people old enough to vote avoid becoming homeless. (Hard to register to vote without a fixed address.)

As for the "studies" linking outside aid to increased unemployment - I suspect these are more ideologically driven than science-driven studies. I'm aware that some "aid" programs involved dumping the donor country's excess agricultural products at zero cost as a way of putting a smiley face on domestic price supports - but these programs weren't really intended to help the starving. Saying that all aid programs are bad because poorly-designed sham aid programs didn't help the purported recipients doesn't make it so. (Folks like the big farming corporations were the true recipients, and did quite well under them.)

Bottom line: there's always a study somewhere explaining why it would be bad for the rich to help those less fortunate than themselves - especially when helping the unfortunate means they'll still be registered to vote in the next election.

[John Thullen]

"Basically, the road to hell is paved with good intentions."

Where does the road go that is paved with bad intentions?

I admit that building a road to hell seems duplicative, considering that Lucifer was cast via United Airlines into Hades.

Unless his flight was delayed.

One thing I hate about the road to hell is that someone made it one-way and a dead end.

Who planned that?

The big central planner in the sky?

[Slartibartfast]

I said 'mama I come to the valley of the rich
Myself to sell'
She said 'son this is the road to hell'

[Gherald L]

> The poverty rate went down after the Great Society. [...]Were there problems with some programs? Yes. Did the programs overall do lots more good than harm? Yes.

Overall good to poverty rates? Possibly, I'm not a student of this subject. But you shouldn't focus on that one metric, you have to look at all the consequences.

Sometimes long-term government programs can be a positive good, such as for research. For example NIH studies of basic health matters that don't result in a product but improve treatments for everyone. Similarly, NSF-funded pure science research can produce valuable knowledge.

But go read about egregious cases like paper industry burning diesel or the consequences of biofuels, then extrapolate down. Or look at how inefficient the public school system is compared to vouchers for school choice.

All state actions are chock-full with a myriad of more minor inefficiencies and unintended consequences, but they really add up over time. That's why it seems to me that government should mostly only intervene briefly and for emergencies, rather than fostering public school monopolies or subsidizing sources of energy or trying to engineer groups out of poverty with Great Society-like programs.

[GoodOleBoy]

Studies that support conservative views are trumped up or distorted and studies cited by those to support views posted here are reliable. My guess is that numbers are looking better in New Orleans because many of those who would contribute to the numbers not looking so good have failed to make it back from where they relocated after the storm, whereas many who arrived in New Orleans from other places went there to work. The War on Poverty dumped a lot of money and certainly should have had some positive impacts. We also had some substantial economic growth in the decades following and that likely had some even more significant impacts. We are not always able to identify the correct cause of a given effect. Or, maybe we like to attribute cause and effect as it pleases us.

[Gary Farber]

"My guess is"

Once again, you get your information from your imagination.

[brent]

Or look at how inefficient the public school system is compared to vouchers for school choice.

Those numbers on education basically tell us nothing and they certainly don't tell us what you and the Cato Institute seem to think:

1. It ought to be pretty obvious that voucher costs are not even close to being comparable to "money spent per student."

2. The DC public school system is not a reasonable stand in for all public education systems - not even just U.S systems.

3. The differences in results for voucher and non-voucher students in DC are not nearly as dramatic as the Cato people seem to be suggesting according to the study it cites.

I would also add that a widespread voucher program would also be an example of pretty significant government intervention so I am not sure how the case that you are trying to make with that example would be relevant to the central issue even if it were correct on the facts.

That there are cases of government creating unnecessary inefficiencies is not a particularly controversial sentiment. The real question is whether markets will, on their own, create the kinds of positive social effects that most of us consider fair or just. Markets, on their own, will very probably do little to alleviate poverty because, for the most part, the existence of poverty is no real disincentive to the accumulation of wealth.

Being a slumlord, for instance, is perfectly lucrative and the logic of acquiring wealth from exploiting the poor in general is pretty much unassailable on its own terms.

Obviously governments, from the local to the federal, can get it wrong in their attempts to fix imbalances. But the fact is that they also do an awful lot right and for the most part, its contribution helps a great deal more than it hurts.

[gregspolitics]

We have in effect had an experiment in this country on the value of govt and public services as a simple comparison of blue states with red states generally demonstrates. Currently, federal revenues produced from economic activity in blue states, which also tend to be more pro-govt at all levels-federal, state and local, subsidize the red states, which are less pro-govt at all levels. The South has survived on the North. Before jobs started going overseas, they first went from the north to the south (think textiles-they went to the Carolinas before they went to Asia). If the South had been allowed to leave the union, or somehow won the Civil War, it would likely have become a third-world country or gone the way of Argentina. The dirty little secret of the southern GOP is that while they lambast the feds they know they need the money. Just look at what has happened in South Carolina, whose state legislature and GOP has forced Sanford to accept the stimulus money. These are states which have the lowest public services funding in the country even with the federal money they get and they are clearly NOT better off than those parts of the country that better fund public services. Do individual govt programs sometimes not work, or maybe even do more harm than good-of course-they are implemented by human beings. That is no more an argument against the general value of government public services than the recent behavior of Wall Street finance is proof that capitalism and private services are inherently bad. Any human system is going to have its share of messes. The genius of this country has been to find a balance between the public and private sectors that has served us well. For some reason, the GOP seems to want to abandon this balance, which is why they are not seen now by the public as offering any real alternative. This brings us to another dirty little secret of the GOP-they have no idea of how to propose to govern in a society which benefits from the success of Obama's policies. Thats why they tolerate the "we want Obama to fail" meme in the party-they have no idea how to respond to his likely success.

[bedtimeforbonzo]

Gherald L: They may have a place for you in a President Jindal's cabinet.

[bobbyp]

"...just as LBJ's Great Society programs have been done more harm than good."

"I'm not a student of this subject (LBJ's anti-poverty programs).'

These comments were written by the same person. I can find no reason to say more.

[bobbyp]

"But I do think the case is clear that over the long run and during normal economic times, intervention is harmful.'

Ya' think so, do you? I guess I should just take my ball and go home in the face of such bulletproof logic.

"For instance some economists are asserting a cause and effect relationship between western aid to Africa and its poverty rate increasing from 11% to 66%."

They (Moyo, Shikwati) posit it from a libertarian perspective. Left wing economists have been pointing out the structural flaws in the current aid paradigm for decades. Where have you been? Not reading books about LBJ, I'd wager.

[Chuchundra]

Where does the road go that is paved with bad intentions?

Cleveland

[Grover Gardner]

"Or look at how inefficient the public school system is compared to vouchers for school choice."

That's just Andrew Coulsen's BS and trickery. Let's look at Sidwell Friends, a prominent DC private school. The tuition for Middle School is $29,442. Now add fees for "parent's association," books and "optional" busing--potentially over $1000 (NONE of which applies to public school parents). Now, let's also look at Sidwell's FOUR concurrent fundraising campaigns for 1) capital improvements and costs ($56 million), 2) "the essential unrestricted dollars for the operating budget that enhance the educational experience at Sidwell Friends," 3) student events and 4) scholarships. Clearly Sidwell relies on private donations for a considerable portion of their expenses. There's NO WAY that that healthy tuition fee covers the costs of what they provide. What they obviously SPEND per student is WAY more than DC's administrative costs.

[Gary Farber]

Where does the road go that is paved with bad intentions?

Cleveland

And on the way there, you can pick up your ideas from Schenectady.

[bc]

Grover:

The charter school my kids attended before moving to California subsisted on state basic needs funding (approx. 2/3 of the local public schools) because the municipality hid behind an ambiguity in the law and refused to provide the local contribution. The school within a few years of operation was in its own purpose-built building still operating on the reduced revenues. Mind you, they still had to pay union wages. And they accepted all comers.

Sidwell is a terrible example unless you want to highlight that the Obamas have such little faith in the public school system that they send their daughters to Sidwell.

However, I look forward to Obama acting on his intentions to provide some sort of merit pay to teachers. That could be the start of something significant.

re Katrina:

And how much did the private sector accomplish? Let's not assign all positive to the public sector. In the immediate reaction to katrian in was the Salvation Armies not the gov't that deserved praise.

Undoubtedly pumping huge amounts of money on construction projects has a positive impact on employment. And it means absolutely nothing in the greater debate about the role of government in our day-to-day lives versus emergency response or Marshall plans or such. This correlation, Publius, is silly.

Re the Great Society: Is the poverty rate the best measure for success? We created a culture of dependency amongst the nations poor that we still struggle to deal with.

Conservatives aren't against helping their fellow man. Compare contributions to charity with liberals. Heck, look at the Obama's tax returns. No serious contributions until he set his sights on higher office. Sure, helping the poor for the Obama's has to come from the government because they don't really believe in charitable help.

All snark aside, I really don't mind a basic government safety net. But government shouldn't be looked to as the only solution or even the main solution.

[bobbyp]

"Conservatives aren't against helping their fellow man. Compare contributions to charity with liberals."

Yet these very same conservatives will decry African aid as debilitating, and lash out at government anti-poverty measures for 'creating a culture of dependence', but private charity is somehow a virtue.

Conservatism = Intellectual Inchoherence.

[Jesurgislac]

Bobbyp: it's perfectly coherent when you understand that for this particular brand of Christian conservatism, the important thing isn't how many poor people charity helps, or how effective the help is: it's that wealthy people should get to do their soul good by giving charity. Then it becomes important that it should be the right kind of charity (so, no money for condoms in HIV-ridden areas of Africa: that isn't felt to be soul-saving for the people who give it) and targeted to the right kind of people (because how can you get a good deserving glow on if charity goes to the undeserving and ungrateful?) - soul-salving gifts need to go to the virtuous poor, not to nasty people. It's quite coherent. It's not particularly nice, but it makes sense from that particular angle.

[ScentOfViolets]

All snark aside, I really don't mind a basic government safety net. But government shouldn't be looked to as the only solution or even the main solution.

Posted by: bc

This is so vague as to mean nothing. Let's do this: I really don't mind a basic government safety net. But government shouldn't be looked to as the only solution or even the main solution.

Even though we've said exactly the same thing, I suspect what we mean is quite different.

[Slartibartfast]

Yet these very same conservatives will decry African aid as debilitating

Uh...that's not me. I'm not sure who you're talking about, but it's not me or any of the conservatives I hang out with.

Which is not the same thing as saying no conservatives decry African aid as debilitating, but: I hope "these very same conservatives" was intended to point at some particular group of conservatives, because it's not true of all conservatives.

Maybe just of all true conservatives, though.

[ScentOfViolets]

Hey, I'm a conservative! All you Reagan-lovers are just reactionary radicals :-)

Not wanting to go to a voucher system after several hundred years of public schools - conservative.

Not wanting to privatize the USPS - conservative.

Thinking you need to pay for what you use - conservative.

[bc]

Even though we've said exactly the same thing, I suspect what we mean is quite different.

Perhaps. But you would be on the right side of a very important line.

Yet these very same conservatives will decry African aid as debilitating,

Conservatives had no problem with Bush's agenda in Africa. I certainly didn't. I hope America's commitment continues along those same lines. Bush had programs to improve business as well as eradicate malaria and treat HIV/AIDS.

Regarding the issue of "debilitation," doesn't everyone think that domestic programs should be tailored to not create dependence and get people being productive again? If not, why not? Criticism of programs that tend to create dependence is not the same thing as saying we shouldn't help the poor.

Jes: What are you talking about? What "particular brand" of Christian conservatism? The brand that had trucks there on the road to New Orleans before the hurricane even hit (Mormons)? Or the brand that performed this kind of service?

[Grover Gardner]

bc--

The comparison wasn't initially mine. Coulson argued that for what DC supposedly pays per student, you could send a kid to a high-end private school. Gherald seems to have bought into this canard and I'm simply pointing out that it's very likely untrue. The fact that Obama chose Sidwell rather than the DC public schools is disappointing, but beside the point.

I'm not sure what your point is about your charter school. Are you saying that it was better than the overall public school system, and cheaper to operate in the bargain (apart from those terrible union wages)? That's entirely possible, but I have a few questions:

How much volunteer work was expected of parents? How much fundraising did the school do? How many foundational grants did they seek and/or obtain? Was there a comprehensive sports program? Was there free busing?

I'm all for breaking out the current system to accomodate charter and satellite schools. It may well be cheaper and better. It seems to me that the current public school system is based on a post-war model of a self-contained, comprehensive world--including competitive sports, after-school activities, free transportation--that delivered parents from responsibility. Shoo the kids out the door from 7 a.m. to 6 p.m. and try to make sure they get their homework done in between TV shows. This system in turn fed a hungry higher-ed machine based on the same sort of self-contained world of activity. Both models are looking less and less sustainable these days.

I'm not sure we should blame the system for trying to deliver what many parents and communities demanded for decades. While charter schools can work very well, they typically call on parents and the community to make up for the deficits in funding. Thus for many people, the psychology behind our notions of what public education means will have to change.

[Sebastian]

"I’m not saying this settles the debate. But it does show that government can play a significantly positive role in people’s lives.

And it reinforces a much larger point -- people like me prefer certain types of government spending because it helps people. It’s not much more complicated than that. I think national health care, broadband investment, and energy reform will help people."

This isn't a very good example. Yes government can help one of the very poorest states rebuild after a natural disaster. By incurring and paying for large costs, it can do that in a small area. That isn't generalizeable because the costs aren't being paid by Louisiana, they are being paid by the rest of the country.

This is especially true in your headline allusion to low unemployment. The government can pay for things from sucessful economic activity outside Louisiana in order to prop up Louisiana. But you can't generalize that to an entire economy, because at some scale you have to internalize the costs.

A precise analogy: you can run a train where most people pay the cost through tickets, but some people sneak on without paying. Perfectly possible. You can run a train where you charge higher ticket prices to most people so that poor people can get on for a reduced price. Perfectly possible. You can run a train where most people pay an even higher price so that some poor people can ride for free. Perfectly possible. You cannot use that as evidence that since poor people can ride for free, everyone could ride for free.

[bc]

How much volunteer work was expected of parents? How much fundraising did the school do? How many foundational grants did they seek and/or obtain? Was there a comprehensive sports program? Was there free busing?

We have much more in common than I initially thought. Our school expected parent involvement through a commitment of hours (tailored to parents' or a parent's ability). The school had not received any significant grants (some computers were paid for) when we left. No sports program and no free busing. Parents arranged for car pools. However, the cost of busing wasn't a cost-savings issue as busing (as I recall) is paid for by the state separately and our students simply didn't receive this funding.

I had no issue with the union wages and thought our teachers should have been paid more. That's why I favor merit pay for teachers.

I do see where you are coming from re the inefficiency of public schools and I don't disagree that Sidwell Friends v. public schools in general may be a poor comparison for purposes of analyzing vouchers.

[Anarch]

The fact that Obama chose Sidwell rather than the DC public schools is disappointing, but beside the point.

Lefty though I am, I'm not disappointed by this choice simply for safety reasons: the odds of the Obama children becoming targets or victims are, I think, lower at a private institution than a public one, simply because of the barriers to admission -- both for the student population and general visitors. It's unfortunate, but completely understandable.

[russell]

IMO, if you want to make the case that government spending and intervention is a net positive, NOLA post Katrina is not a good choice of poster child. Three and a half years later, the city is still a chaotic mess.

Disaster relief efforts generally are not, IMO, a realistic example of what is normally meant by progressive government intervention. Katrina in particular is a really poor one. Just my opinion.

"My guess is"

My guess is that if a disaster the size and scope of Katrina had happened to any other US city similar in size and importance to NOLA -- Cincinnati, or Pittsburgh, or St Paul -- but which was not culturally black and poor, this whole conversation would simply not be happening.

There would have been no delay in getting aid. There would have been no debate about whether to bother rebuilding or not. There would be no question about whether the original residents should be helped to return. There would have been no multi-year gap in restoring essential services, by which I mean water, electricity, sewer, and police.

There would be no insinuation that any part of the problem was due to the shiftlessness of the original residents.