Photo: flickr / Paul Lowry
The political-economy debate-du-jour is whether Texas under Rick Perry is a job-creating powerhouse, or a dystopian charnel house where low-skilled workers go to be chewed into spiritual mulch on an endless low-wage conveyor belt that only ever leads to another McJob.A post at the Political maths Blog does probably the best job of sorting out the competing claims.
You really need to read the whole thing, but to pull out some of the more notable findings: Texas has created a lot of jobs, and its unemployment rate has risen largely because those jobs are attracting lots of people to move into the state.
The jobs aren’t particularly low-wage, and they aren’t all in the energy sector. Democrats trying to push the line that the Texas economy isn’t that great aren’t going to get very far.
It’s pretty great (relative to the suckage in the rest of the country). That’s why people are moving there.
The question remains, however: can we really credit Perry? I’m sceptical, for a few reasons:
- High oil prices mean high living in Texas. The state is no longer as dominated by the energy sector as it was before the collapse in the 1980s, but it’s still got a lot of energy firms, and skilled energy workers. Unless Rick Perry has been sneaking out at night to sabotage Iraqi oil pipelines, or sell automobiles and diesel generators to Chinese families, he can’t really take credit for this.
- The state’s housing sector didn’t boom or bust along with the rest of the country’s. There have been a lot of posts over the past few days attributing this to a peculiar quirk of Texas mortgage law: unlike the rest of the country, Texans essentially cannot do cash-out refinancings for more than 80% of the value of the home. The law, enacted in the wake of the 1980s oil bust and the S&L crisis, undoubtedly helped keep things sane, but it’s not necessarily the whole story. Nearby Oklahoma City also largely escaped the housing bubble, so this may be more of a regional story than a regulatory story. But either way, Rick Perry didn’t personally pass Texan mortgage regulations, and he did not choose to locate Texas next to Oklahoma.
- The governor of Texas isn’t that powerful. In general, Texas has a weak state government, and my understanding is that the power of the executive is further diluted because powers that are normally concentrated in the office of the governor are actually spread out over a handful of elected officials. So even if awesome policy was responsible for how well Texas is doing, you couldn’t give all the credit to Perry.
- No governor is really that powerful. Economic growth is complicated. Sure, tax and regulatory policy help–and you’ll be unsurprised to learn that I think Texas has about the right take on these things. But low taxes and a light regulatory touch do not, by themselves, produce economic growth. (Witness Texas in the 1980s.) And even if it were that simple, the governor of a state is not Captain Jean-Luc Picard of the USS Enterprise–he does not simply point his hand at his underlings and say “Make it so!” Institutional inertia is a force more powerful than even the steely will of your favourite politician. A governor can make a difference, even a sizable one, at the margins. But he cannot single-handedly turn a state government around, much less the rest of the state.
I think that the Texan policies conservatives tout are probably contributing to growth, and not just in the form of beggar-thy-neighbour competition. Anyone who thinks that that’s all there is to state-level tax policy needs to acquaint themselves with the concept of deadweight loss.
Nor am I impressed with the much cited evidence that an unusually high percentage of Texans are uninsured: Hispanics and young workers are much more likely than other groups to lack insurance, and even most legal immigrants cannot qualify for Medicaid within five years of their arrival in this country, while with limited exceptions, illegal immigrants generally can’t qualify at all (Obamacare doesn’t much change this). Texas isn’t really to my taste, but from the evidence of all the people voting with their feet, it seems to be a pretty good place to live.
But though I think the state has a pretty good policy environment, that’s the beginning of the story, not the end of it. There are a lot of reasons for Texan growth, and very few of them can be laid at the feet of the governor. For which we should really thank God. If states really could be boosted into the stratosphere, or driven into the ground, merely by changing the occupant of the governor’s office, we’d have to live with the constant risk that our fellow voters would elect an idiot, and destroy our lives. Thankfully, the government isn’t quite that powerful.
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