Legal Lines with Locke Meredith
Show #132, Guest: Loren Scott
Attorney Locke Meredith interviews economist, Dr. Loren Scott, and discusses the economy in Baton Rouge.
Dr. Loren Scott is a Professor Emeritus in Economics at LSU. Dr. Scott got his PHD in economics in 1969, after which he came to LSU and taught there for thirty years. He taught in the MBA programs primarily, served for 13 years as chairman of the Economics Department, and has also been studying the Louisiana economy very intensely for the past thirty years. He started a consulting firm in the eighties, which has been doing consulting for big companies like Exxon and Chesapeake Energy, he does the Louisiana economic outlook forecast, and also travels all over the nation giving speeches on the state of the economy. Dr. Scott has been quoted or hosted on MSNBC, CNBC, Wall Street Journal, and many other major forms of media.
Dr. Scott explains what he is concerned about in his study of the economy. He primarily is concerned with forecasting levels of economic growth such as job growth, income growth, Gross National Product, employment. He spends a lot of time talking to individuals who run companies, executives around the state, and other officials to find out what is going on in Louisiana. With his economic analysis, Dr. Scott tries to tell people how well their area of the state is doing, and what they can expect over the next two years. On a national level, Dr. Scott gives speeches to try to explain why we are in this funk, nationally, the reasons he believes we are in this recession. Dr. Scott points out that, since Franklin Roosevelt, no President has ever been re-elected with an unemployment rate above 7.2%, thus it makes sense that President Obama is so concerned with this.
Dr. Scott explains that as residents of a state with such a huge chemical industry, we ought to be quite concerned with the state of the national economy. Cars and houses are both, he says, mostly made up of chemicals. If the national economy is in a poor state, there are fewer buyers for our products, as a state, which puts us in a bind. However, thanks to very few durable goods manufacturing plants in Louisiana, we are able to buffer a national recession better than others like Michigan. Louisiana lost only 2.8% of our jobs when the nation lost 6.1%. One of Louisiana’s main exports is chemicals, of which we are number three in the nation. The reason for this, Dr. Scott explains, is the cheap cost of natural gas in Louisiana, which chemical plants depend heavily upon. Another export of Louisiana is oil, of which we are the number one producer in the nation if you include our offshore drilling. We are also the number three producer of natural gas in the nation. Louisiana also has a huge shipbuilding industry. However, the closing of Avondale Shipyard in New Orleans in 2013 will put a dent in this. This will result in a loss of 4,500 jobs. Avondale is now moving to Pascagoula where they have another shipyard. Louisiana also exports their agriculture, but despite common belief, this only makes up 2% of our income.
On a Federal level, Dr. Scott is seeing our current economy as one that looks comparable to the recessions of 1980 and 1981, however instead of coming out of this recession with a huge surge, as was the case with these two, we are limping out slowly. Gross Domestic Product is the indicator of this, which is currently growing at less than 2% a year. Over regulation is to blame for this, says Dr. Scott. In these previous recessions in the 1980’s, President Ronald Reagan deregulated the economy and dropped tax rates from 50% down to 28%. “We are regulating the skunk out of our economy,” says Dr. Scott. This is the kind of regulation that is causing our offshore drill ships to leave Louisiana and go to other countries. This over regulation is also hindering the building of the Canadian pipeline across America. To those who believe this pipeline with contaminate their aquifers, Dr. Scott explains that Louisiana has enough pipelines in it to go around the world five times, yet we have never had a single problem with them.
Dr. Scott explains that any basic economics textbook will show you that we need to lower taxes to boost our economy. Raising taxes to boost the economy, he explains is used to try to either create jobs or to redistribute wealth. He points to Europe as an example as to what happens when you try to level the playing field and redistribute the wealth, noting their characteristically high unemployment and slow growth. Government mandated programs, Dr. Scott explains, lack incentive that private sector companies have. Furthermore, he dives into the issue of how to help those who are less fortunate in your society without reducing their incentives to work, thus creating idleness.
In Baton Rouge, Dr. Scott talks about the huge growth in the chemical industry, which is good for our local economy. Also, he talks about the discovery of the Tuscaloosa Marine Shale, which he believes will result in lots of growth for our Louisiana and Baton Rouge economies due to everything from more heavy rigs moving in to royalty and lease payments to our residents. Other local developments include a new riverboat casino, a new polymer plant in Port Allen, and some new plants in Ascension Parish. State Government, however, is something that we do need to be concerned about, in the form of layoffs due to their limited budget, he says. Overall both Baton Rouge and Lake Charles are in good economic positions, while New Orleans, Dr. Scott believes is facing some slow growth over the next few years. The show comes to a close.
