The Economist: California v. Texas

The Economist has an editorial comparing California and Texas combining its usual unthinking prejudices with some actual insights (likely drawn from my stuff).

It's not surprising that a lot of the politicians most responsible for the Minority Mortgage Meltdown in California -- such as George W. Bush, Karl Rove, and Clinton's HUD Secretary (and later Countrywide director and frontman on its trillion dollar pledge of lending to the "underserved") Henry Cisneros -- are Texans. Their policies weren't incredibly harmful in Texas, which they understood fairly well, but were in California, which they didn't.

Do keep in mind that California was much more impacted by immigration over the last generation than Texas: in the 2000 Census, 26% of California's residents were foreign-born versus only 14% of Texas's.

AMERICA’S recent history has been a relentless tilt to the West—of people, ideas, commerce and even political power. California and Texas, the nation’s two biggest states, are the twin poles of the West, but very different ones. For most of the 20th century the home of Silicon Valley and Hollywood has been the brainier, sexier, trendier of the two: its suburbs and freeways, its fads and foibles, its marvellous miscegenation have spread around the world. Texas, once a part of the Confederacy, has trailed behind: its cliché has been a conservative Christian in cowboy boots, much like a certain recent president. But twins can change places. Is that happening now?

It is easy to find evidence that California is in a funk (see article). At the start of this month the once golden state started paying creditors, including those owed tax refunds, business suppliers and students expecting grants, in IOUs. ...

Plenty of American states have budget crises; but California’s illustrate two more structural worries about the state. Back in its golden age in the 1950s and 1960s, it offered middle-class people, not just techy high-fliers, a shot at the American dream—complete with superb schools and universities, and an enviable physical infrastructure. These days California’s unemployment rate is running at 11.5%, two points ahead of the national average. In such Californian cities as Fresno, Merced and El Centro, jobless rates are higher than in Detroit. Its roads and schools are crumbling. Every year, over 100,000 more Americans leave the state than enter it.

... Not that Californian government comes cheap: it has the second-highest top level of state income tax in America (after Hawaii, of all places).

Why is it surprising that the state with the nicest climate and the state with the second nicest climate have the highest and second highest state income taxes? California's income taxes are intended to exploit people willing to pay heavily to live in California. For example, golfer Freddie Couples lives in Santa Barbara because he can afford to live anywhere. In contrast, a skinflint like Tiger Woods officially moved from his native California to income-tax free Florida on the day he turned pro in 1996 to evade the California income tax.

Indeed, high taxes, coupled with intrusive regulation of business and greenery taken to silly extremes, have gradually strangled what was once America’s most dynamic state economy. Chief Executive magazine, to take just one example, has ranked California the very worst state to do business in for each of the past four years.

By contrast, Texas was the best state in that poll. It has coped well with the recession, with an unemployment rate two points below the national average and one of the lowest rates of housing repossession. In part this is because Texan banks, hard hit in the last property bust, did not overexpand this time. But as our special report this week explains, Texas also clearly offers a different model, based on small government. It has no state capital-gains or income tax, and a business-friendly and immigrant-tolerant attitude.

... And as happens to fashionable places, some erstwhile weaknesses now seem strengths (flat, ugly countryside makes it easier for Dallas-Fort Worth to expand than mountain-and-sea-locked LA ...

That's connection between topography, home prices, and politics is straight out of my stuff.

Texas also gets on better with Mexico than California does.

Let's unpack that "immigrant-tolerant" idea a bit. California is clearly more liberal than Texas, so ideologically Californians are supposed to be more "pro-diversity," but that works out as true mostly in theory and in public pronouncements. As I've long pointed out, elite Californians feel very little cultural connection to their Latino servitors. California's elites find nothing more boring than Mexicans. In contrast, Texas has a more rough-hewn culture, including at the elite level, so Texans tend to feel more in common culturally with immigrants from culturally-backward Mexico.

Also, there are some old elite Mexican-American families in San Antonio who fled the Mexican Revolution of a century ago who are part of the Texas Establishment. In California, there aren't any elite old money Mexican-American families that I can think of. (There are WASP families in Pasadena who have one or two land grant Californio grandees in their family trees -- enterprising Bostonians and New Yorkers were already taking over California by marrying the daughters of rich landowners before the U.S. military made it official -- but that's about it.)

And, it's not uncommon for rich Mexicans from Monterrey to visit Houston for shopping and surgery, although they are most likely to move to Miami. In contrast, rich Mexicans avoid Los Angeles like a plaguespot -- too many poor Mexicans here, I guess.

In general, Texas and northeastern Mexico, the most advanced part of Mexico, aren't particularly divided by topography, so there are more business contacts, whereas California is separated from the bulk of the Mexican population by an unpopulated desert in northwestern Mexico.

So, the political dynasties of Mexico and Texas, such as the Salinases and the Bushes, are quite friendly with each other, while Mexican political corruption in California is largely home-brewed.

American conservatives have seized on this reversal of fortune: Arthur Laffer, a Reaganite economist, hails the Texan model over the Gipper’s now hopelessly leftish home. Despite all this, it still seems too early to cede America’s future to the Lone Star state. To begin with, that lean Texan model has its own problems. It has not invested enough in education, and many experts rightly worry about a “lost generation” of mostly Hispanic Texans with insufficient skills for the demands of the knowledge economy.

Actually, Hispanic Texans do much better on the National Assessment of Educational Proficiency exams than California Hispanics: 26% of Texas Hispanics score Proficient or Advanced on 8th Grade Math versus 11% of California Hispanics.

In general, Mexican-Americans appear to thrive more in a cultural and economically conservative Republican state. Liberal policies, in contrast, works best in a high IQ / highly cooperative state with few NAMs, such as Minnesota.

Now immigration is likely to reconvert Texas from Republican red to Democratic blue; Latinos may justly demand a bigger, more “Californian” state to educate them and provide them with decent health care. But Texas could then end up with the same over-empowered public-sector unions who have helped wreck government in California.

The problem is that, as traditional tax-and-spend voters, Mexicans subvert conservative politics in a state, both adding Democratic voters and driving out Republican voters. Thus, California, which voted GOP in 9 of 10 Presidential elections from 1952 through 1988 has voted Democratic five elections in a row. Over 90% of Hispanic elected officials are Democrats.

My published articles are archived at iSteve.com -- Steve Sailer