June, 2008

Louisiana's Performance in the New Knowledge Economy

  • Bruce Yandle

    Distinguished Adjunct Fellow
  • Jody Lipford

    Professor of Economics, Presbyterian College
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Can Louisiana improve its economic fortunes? We answer with a resounding "yes."  Improvement, however, will require the state to embrace fully the knowledge economy of the 21st century, a step the state as a whole has not taken, despite the progress of its metropolitan areas.  To attract new businesses and bright workers, and to ensure that current businesses and talented workers not only stay in the state, but also thrive, we recommend the following changes:

  • Create a more hospitable tax environment, by cutting local option sales taxes and sales taxes on certain business-to-business transactions.  Lower marginal income tax rates would also make the state more competitive.
  • Examine closely the tax burden faced by young professionals who might be attracted to the state, finding ways to lighten the burden for this important age group.
  • Create a more hospitable legal environment by passing and enforcing statutes that root our systemic corruption.  The state's legal system, which the private business sector perceives as unbalanced and unfair, should also be revamped to reduce liability risk.
  • Improve traditional government functions by upgrading the state's transportation system and reducing the rates of violent and property crime.
  • Strive to raise educational performance, particularly in K-12, where reading and math proficiency, as well as high school graduation rates, are low.
  • Continue policies that make higher education affordable, recognizing that other policy changes will help the state retain a larger share of its educated and talented citizens.
  • Expand state and local support of the performing arts, parks, libraries, and urban areas, taking steps to make Louisiana towns and cities more attractive to young professionals and their families.
  • Increase funding for internet coverage and for technology in the classroom and in public libraries.  Make Louisiana the country's most connected state.

The economy of the 21st century is dynamic.  The challenges are many.  Louisiana finds itself in 2008 meeting some of these challenges.  Yet, there is much room for improvement.  We believe that implementing the steps above will help Louisiana catch up to and even surpass the economic performance of many states and grant it the requisite resources and flexibility to become a leader in the knowledge economy.