August 16, 2011

The Texas Miracle

With the advent of Texas governor Rick Perry in the GOP Presidential race, there has been a lot of talk about the large number of jobs created in Texas v. the rest of the country. Much of the liberal critique of Perry (Paul KrugmanEzra Klein, Matthew Yglesias) is finally reflecting my 2005 analysis of Texas v. California, The Dirt Gap. Hey, it doesn't have much to do with Perry, it has to do with there being a lot of land in Texas, and not much environmental regulation, so housing prices are cheap!

A couple of additional Texas themes of mine that may become conventional wisdom in, oh, a half dozen years are:

- The bad news for Democrats from the Texas experiment is that it suggests that driving down the skill level of the population through mass immigration means that the only affordable, feasible kind of government in a future heavily mestizo America is a low tax - low spend - low regulation - conservative values Texas-style Republicanism.

- The bad news for Republicans out of Texas is that just such policies attract in so many immigrants and encourage so much fertility among immigrants that the Republicans will eventually get swamped demographically.

39 comments:

Anonymous said...

Despite Texas not being so miraculous(low paying jobs for illegals and low youth employment), I doubt any opponent would call him on that.

On the fertility front aren't second generation hispanics falling to ~2.2? It would seem that mass immigration were more the issue.

Anonymous said...

One thing Texas does more effectively than California is collect taxes. It doesn't matter what the tax rate is if you can't actually collect because folks can find ways to evade it. In Texas, the main taxes are property, and sales taxes. Illegals have to pay the property taxes with their rents. Texas property taxes are fairly high in urban/suburban areas. That depresses property values because even though the payment on a mortgage on a $250k house might only be $1000 a month, you have to add $700 in property taxes. So, instead of the builder and lender making a higher margin, the state gets the extra $$ that the resident pays either through his mortgage payment or his rent. Also, sales taxes are pretty straightforward to collect as well. California uses income tax which is harder to collect especially when folks are unemployed or work for cash etc. With high business taxes, merchants and service providers are more motivated to offer cash discounts to hide income. However, with a low business tax, there is much less incentive because even an 8% sales tax doesn't dissuade consumers.

The key for any state is structure taxes so as to actually collect, not just have some official rate that many are able to avoid.

Daily Essential Steve Sailer said...

Wow, Steve, you really saw that one coming!

You're a phophet!!!!!

You're *THE* Prophet.

I'm going to call you The Prophet Steve, from now on.

Steve Sailer said...

Yes, I would say that noticing that Texas has a lot of dirt is one of biggest conceptual breakthroughs!

Anonymous said...

the only affordable, feasible kind of government in a future heavily mestizo America is a low tax - low spend - low regulation - conservative value Texas-style Republicanism.

That's only true for mestizo levels of below 35%. Once they approach majority levels in a population, the mestizo's will convert America to Mexican-style low-regulation.

Texas is already demographically doomed. In the next twenty years white Republicans there will slide into the minority and the state will become the next California. This is scientic fact, not opinion. The majority of young Texans are already mestizo.

Texas First! said...

Over at Texas Monthly, Paul Burka has an interesting post about Texas, Rick Perry and football:

"Texas A&M’s move to the Southeast Conference is not just about football. It is also about politics. It is a way for Perry to validate himself as a southerner. In one bold move–and don’t think for a moment that Perry didn’t orchestrate this–Perry has used A&M to leverage himself into prominence in the South, an area where a Republican presidential candidate must run well. The A&M culture and the southern culture mesh well. It’s military, it’s patriotic (if you overlook the Civil War), it’s athletics overshadowing academics at most institutions, the exceptions being Vanderbilt and Georgia."

Watching the realignment of college football conferences is a glimpse into the political future of the nation. Red States consolidating in every way, as much as possible, to dissociate themselves from Blue States. If you currently live in a Blue State, now would be a good time to move.

Anonymous said...

Sailer is really in love with himself lately.

Anonymous said...

At one point, believe it or not, California was a mostly Republican state that gave us Goldwater, Nixon, and Reagan. If California can go, at some point so will Texas.

I don't see Texas staying a low-tax if the Democrats gain power. Most likely there will be a large increase in taxes to fund more extensive social services.

slumber_j said...

Second Anonymous makes a very interesting point about the collectibility of taxes--one I've neither heard nor thought of before. Which may only reflect my own ignorance and/or slow thinking, but it's still a good point, no?

Anonymous said...

"the only affordable, feasible kind of government in a future heavily mestizo America is a low tax - low spend - low regulation - conservative value Texas-style Republicanism. "

Not exactly. So long as there is a significant higher earning white population it will make sense for a Mestizo dominated public sector to find ways to extract and spend as much of their money as possible. It's only after the white population nearly vanishes that a place will resort to government on the cheap, where low paid civil servants demand gratuities from the served.

Mark Royer said...

Really got a kick over the Dems claiming that it was the Obama/Dem policies that can be credited for the growth in Texas jobs. It worked in Texas but not in California, New York, etc. Just worked in red states. Go figure.

elvisd said...

"Texas A&M’s move to the Southeast Conference is not just about football. It is also about politics. It is a way for Perry to validate himself as a southerner."

Sometimes I wonder if keeping SWAC football alive is what helps maintain those Historically Black Colleges, besides the obvious reasons.

TGGP said...

Ed Glaeser argues that it's not merely a function of having available land, but that zoning laws play a much larger part. But Steve knows that and has mentioned how people naturally start favoring restrictive zoning once they've got a nice place in California. Tyler Cowen instead argues that Texas political culture simply gives less influence to "Mantua moms".

Eric said...

I don't see Texas staying a low-tax if the Democrats gain power. Most likely there will be a large increase in taxes to fund more extensive social services.

Government moves in cycles, and state governments are no exception. Eventually Texas will be just like California.

Hopefully by then the California voters will have pulled their collective head out. But I'm not banking on it.

good comments above said...

Great point about tax collection anon.

Also, interesting on the A&M/SEC thing Texas First.

Texas has also been blessed with gas, oil and minerals in its big dirt. High prices and recent innovations (fracking) have been helpful for the economy. Wind is plentiful in Texas as well, which doesn't hurt.

Having a long border with Mexico also means trade opportunities most states don't have and jobs in border patrolling (although not enough of them) that most states don't have.

Can Steve give us his guess at Perry's IQ. His GPA was not impressive, but he did end up as a pilot

"Upon graduation, he was commissioned in the United States Air Force, completed pilot training and flew C-130 tactical airlift in the United States, the Middle East, and Europe until 1977."

A lot of people want to be pilots but don't pass the required tests. I really don't think you'd find too many pilots sub120, but I don't know.

David said...

Texas isn't high on most people's lists of cultured, pleasant, non-barbaric places. I class it roughly with Alabama.

Last time I was in downtown Dallas, the choking smog, the dirt, a NAM donnybrook below my hotel window (the noise climbed 25 stories), the apparently limitless slum-like vacuity not more than a half mile away in every direction, the plastic empty people - made such a bad impression that I won't be back. By the way, what do you wager that there is a very specific reason why they won't tell us the average pay of all those "miraculous new jobs" in Texas?

RKU said...

So long as there is a significant higher earning white population it will make sense for a Mestizo dominated public sector to find ways to extract and spend as much of their money as possible.

Actually, if California is the example under examination, I think it's the Hispanics (and Asians) who tend to work in the private sector, while the whites (and especially blacks) skew more towards public sector jobs.

Ben said...

Is Steve's meaning that Mexican immigrants love the consequences of conservative government, but are so stupid that they can be counted on to vote for the opposite sort of government?

Jack Aubrey said...

"Texas is already demographically doomed...The majority of young Texans are already mestizo."

Not that 20 years from now matters. Rick Perry, who reminds me more of Elmer Gantry/Huey Long than of a contemplative man, will ride his supposed "miracle" into office.

And what annoys the most is the man has too many similarities to Bush: shitty grades, college cheerleader, military pilot (though active duty instead of Guard), "evangelical," and Texas governor.

Bush, Obama, Palin, Perry. In 2011 this is what we're left with. It's like we're casting parts in a movie.

"The A&M culture and the southern culture mesh well. It’s military, it’s patriotic (if you overlook the Civil War)"

I reckon the Confederates loved their country. They just didn't consider anything north of the Mason-Dixon to be "their country."

Anonymous said...

By the way, I put Texas at 25th in unemployment rates, below solid Red State marvels like Pennsylvania, New York, Massachusetts, and Vermont.

Most of the energy states have low unemployment rates - Oklahoma (5.3%), North Dakota (3.2%), Louisiana (7.8%), and Wyoming (5.9%).

Texas's employment growth seems to result from three things that bode well for Texas but poorly for the rest of the US: high energy prices, growing economic ties with Mexico for which WE are on the losing end (we used to have a trade surplus with Mexico, now we have a deficit), and an increasingly unmanageable, unliveable major state on our West Coast that people and businesses are fleeing in droves.

Anonymous said...

"Upon graduation, he was commissioned in the United States Air Force, completed pilot training and flew C-130 tactical airlift in the United States, the Middle East, and Europe until 1977."

He joined in 1972, near the end of Vietnam. No one wanted in the military then. The military academies are thought of as selective, but I knew a guy who entered the Air Force Academy right about the time Perry entered the Air Force. I asked him how he got in. He replied: "It was easy. I was the only guy in my congressional district who applied."

Anonymous said...

OT, but the NY Times on the Dutch and immigration. Refreshingly blunt, to say the least.

FortyP said...

Here's a back of the envelope calculation of per capita household debt / per capita income for 11 states.

California's residents are the most indebted, with household debt 170% of yearly income.

Texas residents are the least indebted with a debt to income ratio of only 88%.

This is not surprising since house prices are higher in California and Mortgages + Home Equity Loans are 80% of personal debt. (The other components Auto Loans, Credit Cards, and Student Loans are about 5% each)

Presumably, Californians have more assets to offset their larger liabilities.


Personal Debt Income
CA $73,300 43,104 170%
NV $60,190 36,997 163%
AZ $50,430 34,999 144%
NJ $60,560 50,781 119%
FL $46,560 39,272 119%
U.S. $47,264 40,584 116%
IL $46,960 43,159 109%
MI $35,500 35,597 100%
NY $48,210 48,821 99%
OH $34,090 36,395 94%
PA $37,970 41,152 92%
TX $34,640 39,493 88%

--

Sources:
Income
http://bber.unm.edu/econ/us-pci.htm

Total Household Debt per Capital
(includes Mortgages & Home Equity Loans. Auto Loans, Credit Cards, Student Loans)

http://data.newyorkfed.org/creditconditions/

http://www.newyorkfed.org/research/national_economy/householdcredit/DistrictReport_Q22011.xlsx

There isn't as much of a difference with public debt. Texas is estimated to have $8,282 State+Local Debt per Capita this year, and California $9,816.

http://www.usgovernmentspending.com/state_summary.php?chart=H0&year=2011&units=d&rank=d

Anonymous said...

Texas has a few things working in its favor, of which only one can Rick Perry take (partial) credit for:

1) Mineral wealth, put there by God, not Rick Perry (I hear he likes giving credit to God, so he shouldn't mind).

2) Proximity to Mexico at a time of increasing international trade (thanks to God, not Rick Perry).

3) Coastal access (thanks to God, not Rick Perry).

4) Lower costs of living compared to California.

5) The political dissolution of California (thanks to Goddess and California SWPLs, not Rick Perry).

6) Austin's tech industry, there long before Rick Perry was guv.

7) Texas's status as the only conservative megastate. Most western states have one big metro area - Arizona has Phoenix, Colorado has Denver, Utah has Salt Lake, Oregon has Portland. But Texas has at least 4 metro areas with over a million people, all reasonably close to each other.

We just went through a massive economic meltdown that left serious doubts about America's competitiveness. If you're a business looking to expand, you want lower costs and fewer regulations. Rick Perry can at best be said to have continued the reltively conservative traditions of Texas pols. Were he governor of any other state no one would be talking about him for president. It's his luck that none of the other candidates seem all theat impressive, either.

Fred said...

"Texas isn't high on most people's lists of cultured, pleasant, non-barbaric places. I class it roughly with Alabama."

Alabama doesn't have Austin, and plenty of trendy East and West Coast hipsters and techies have nice things to say about Austin when they go to SXSW.

Polistra said...

Excellent point about property vs income tax. The very rich and very poor can evade income tax, but only a squatter evades property tax. And squatters don't last long in any western state.

W Baker said...

Eventually the government becomes PRIN - Institutional Revolutionary Party NORTH, or WAR, We Americans Right - or some other hegemonic party that would rule for 75 years.

The problem for the overlords is that they would have trim their numbers 10 or so times over.

The Anti-Gnostic said...

Presumably, Californians have more assets to offset their larger liabilities.

No, they've got cash flow, not real wealth. One medical emergency, job loss, demotion or bad year and they are instantly underwater on their leased autos, country clubs, credit cards, designer homes, etc. I'm betting the finances of a lot of Californians are like this guy's. What a sick, sad wreck.

Most of the American economy is just future demand pulled forward with debt and ginned-up dollars. Eventually you run out of future.

Anonymous said...

One thing to consider about Perry versus other govs of other states throughout recent history:

One can lead a state with just about everything in the way of natural resources, plus great weather and an extensive transportation system, and still mangage to f**k it royally.

I give you California.

Ramblin' Wreck said...

"...it’s athletics overshadowing academics at most institutions, the exceptions being Vanderbilt and Georgia."

Burka understands Texas politics much better than he understands the University of Georgia.

Chicago said...

Articles like this are depressing in that they just highlight how unimpressive our politicians are. We're left trying to parse out the meager good qualities they might or might not really have.
With the US at a crossroads today one thinks the situation would throw up public figures of greater stature; instead the opposite seems to be happening.
The only thing I think is guaranteed is that no matter who wins I lose.

Georgia Resident said...

The silver lining to this cloud is that Hispanics seem to be concentrating in large, heavily-populated states like Texas. This means that their overall influence in government will be less than their numbers, since the Senate has equal representation for all states, and the electoral college apportions 100 of its 535 votes on a similar basis. This means that non-Hispanic whites will have relatively greater importance in government, compared to our population size, which will be useful if and when we decide to start throwing our weight around in our own interests.

Anonymous said...

Give it up, Fred. David knows all there is to know about Texas from pacing around his crappy Dallas hotel room.

Anonymous said...

"Texas isn't high on most people's lists of cultured, pleasant, non-barbaric places. I class it roughly with Alabama."

Please don't lump us in with Texas. Alabama does have its own historical charm in certain parts.

-Alabamian-

Perry the MSM-appointed RINO said...

This is one in a string of MSM stories that stretching back over a year to promote Rick Perry to the GOP masses with pseudo stories.

For example, Perry's strong boarder theatrics get relatively uncritical coverage in the MSM. This, despite his actions have nearly all been open boarder in effect.

Much like McCain got all the MSM love until he captured the GOP nomination, Perry is the anointed "conservative" challenger. The powers that be know that even if Perry beats Obama, they will have the same man in office.

Jack Aubrey said...

"For example, Perry's strong bo[]rder theatrics get relatively uncritical coverage in the MSM. This, despite his actions have nearly all been open bo[]rder in effect."

Yes. He "screams" at Obama demanding enforcement at the border, but grants illegals in-state tuition (the first state to do it; he effectively launched the DREAM Act movement), opposes local law officers helping to enforce immigration laws, and opposes E-Verify.

Bottom line is you need to eliminate government benefits and jobs for illegals, and you need local enforcement because almost no one ever gets stopped by a federal law officer.

There are already 11 million illegals here and about 40% of them came legally but didn't leave. If you don't have interior enforcement you don't have shit.

ben tillman said...

Burka understands Texas politics much better than he understands the University of Georgia.

Ha. The funniest thing when I was there was hearing them call Clemson a cow college -- as if the Georgia legislature might have decided to put the cow barns on North Avenue instead of in Athens!

ben tillman said...

"Texas isn't high on most people's lists of cultured, pleasant, non-barbaric places. I class it roughly with Alabama."

Yeah, well most people get their opinions from people like you, so there you have it.

Anonymous said...

Perry is full of BS. If he gets elected, expect 4 more years of Bush/neoconservative nonsense.