These are some of the issues discussed Thursday when I interviewed Peter Ricchuiti, Professor at Tulane Business School during a streamed event to Facebook, Twitter, Youtube, Periscope and Linkedin. Below is the transcript of part two of the discussion and the video of the entire conversation. Also, here is part one. Part 3, Monday.
SABLUDOWSKY: So oil prices actually have improved--what is it right now the last that you looked?
Dr. Peter Ricchuiti Tulane Business School--stocks, Louisiana, US eoonomy
Peter Ricchuiti discusses US economy
RICCHUITI: The last between seventy and seventy five dollars and, but the thing is, people don't have much confidence that those prices are gonna stick--and if you're an oil company, I mean what they do offshore is just an engineering marvel there but they're between the time they bid on that water bottom from the federal government and the time they actually get oil to the refinery, is can be up to about four years, so if you're drilling now you've got to have a lot of faith in where oil price is gonna be down the road, a long way down the road and because you're spending a billion dollars it out there and so I think that's what's made people hesitant. And of course the shale, the shale fields seem unlimited when we went over there and you visit with Texans and Texans were always very optimistic , they --one of the great oxymorons is the Humble Texas. But yeah they they're telling us they've got zillions of years worth of shale oil out there. And and that's one of the things that's happening, every time the price moves up, more shale is is produced because it's become so much more lucrative and that in turn pushes the prices down. So you have this very odd -- what would work of course is if the shale producers got together and decided how much oil they were gonna produce and but but that's it's really illegal. That's what it is, yes. You can have a cartel of the United States. So uh but that's that's kind of where we where we stand but go to places like Houma and Lafayette driving through there a lot and that's still pretty sad, see all that equipment just laying laying around there
SABLUDOWSKY: So do you expect the Louisiana economy to improve, I mean I know that it's very speculative I understand that, but I mean the the governor is getting hit for a very poor economy, I think the last, I believe is the last that I saw,
RICCHUITI: And we finished at the bottom of every single poll except for percentage of people incarcerated we're very very high on that one. But it's and with their look is education workforce, so we've got a long way to catch up in those areas, so when you look at the Louisiana economy, it's always very volatile according to trade and oil prices and such but what we need is a stable economy that isn't tied to such volatile indices and I will have to see word where it all goes. I'm glad I'm here.
SABLUDOWSKY: Oh yeah in we're glad that you here too, I mean absolutely. And you're you've won awards over Tulane four top professors at the business school so they glad you're there too. But we have an election coming up and some people are not glad that the governor is a governor and they blame him for the bad economy
RICCHUITI: Yeah I think that's really hard to do, because he inherited just an enormous enormous deficit that that Jindal got us into and and he's got a legislators been very it kind of on that no tax, no time kind of piece--I don't even know if that's really statesmanship and I don't know if it's financially responsible. You've got a situation and you have to have to balance the budget. I think the increase in the sales tax is difficult because it is a very regressive tax, it tends to hurt the poor more than more than the rich. In fact that's when you look at the national tax cut that just came through, it was it that was odd too because if you wanted to stimulate the economy which is ostensibly what they what they won't want to do, you would give the tax cut to the middle class. Because the middle class will spend a hundred cents of that dollar and the wealthy will spend a little bit and and and save the rest of it. And because one of the things that people get wrong over the last thirty years or so I think they've been skewed this way, but the idea that rich people are the job creators and it's really not true they're the rich people certainly helped but it's the middle class consumer that's the job creator. I mean demand creates supply, supply doesn't create demand, so , it's said, but economics is not a strong suit in this country. They asked saw funny poll once, they asked people with the Federal Reserve was, some thought it was an Indian reservations, some thought it was a brand of whiskey-- it's it's a yeah,
SABLUDOWSKY: So let's see I'm looking at a comment, actually a question--can Peter elaborate a little on who the tariff is hurting and what the people are saying, who it's hurting. I haven't heard of reasonable-- unreasonable complaints we all know we have to suffer briefly until the playing field is more level. And he says does he agree that once more in-house manufacturing is available then it's beneficial for a long term. So there's three questions there. So let's start at the first one who is a tariff actually hurting at this point, and and do you expect hurt and we looked we were talking about Louisiana?
RICCHUITI: Yeah well look let's take an example-- as the best example is the steel and aluminum tariffs that have come in, it's helping you if you're producing steel, if you're making things with steel it's killing you. The same thing with aluminum. Aluminum, we have very few smelters in the United States, in fact 98% of if you look at the American aluminum Association 98 percent of the the members are people that use use aluminum. And so it's helping a small, it's hurting a bigger group than it then it's helping, and I just think that's really really curious so and one of the things people don't get as they seem--it's two things people yet they think that we're not manufacturing anything in the United States that's a big thing to say in barrooms and things like that. But we're manufacturing more than we ever have in the United States but we're doing it with far fewer people. We're much more efficient and that's that's not gonna reverse. There's just no way. Nobody's gonna sign up for that in fact if you look at the capital expenditures, US companies have been, they've received a lot of breaks they're earning tons of money but they're not spending a lot so in some ways they're using the money to buy back shares, do a lot of mergers and acquisitions so in some sense I think we're eating our feed corn, we're not really planning for the future. But uh this is this is the problem on the manufacturing,r if you look at the money that's being spent right now for capital expenditures, almost all of it is going towards things materials machines go to improve productivity, and there's two reasons for that: one, is that certainly makes sense but the other is, corporations are looking at the situation and they don't have any workers left and the only way to kind of combat that is to create machinery and everything else that'll be able to do with fewer workers. So I just don't see the the manufacturing base. I see more production but I don't see a lot more people being hired. And you see that offshore too - Steve. It 30 40 years ago there are a lot of people that did a lot of kind of brawn kind of jobs out there and now these are the most sophisticated technology people i've ever seen in my life. So it's difficult. We'll have to see where this shakes out.