Monday, August 15, 2011

"Don't Mess With Texas" - What Scares Liberals About The Texas Economy

In the last two days, since Texas Governor Rick Perry declared his candidacy for President of the United States, we have received numerous queries from friends who know that the two sisters are not only opinionated, but Texas residents as well, albeit one is a "Winter Texan."  To be truthful, we are not "experts" on Rick Perry.  We are learning more about him as we are about the others.  Having not ever considered him in the context of presidential candidate we need to begin thinking of him as such.  We've been studying and reading about the other GOP candidates as well.  Unlike the 2008 race, there is only one contender on the Democrat side and unfortunately, we know entirely too much about him. 

This article appearing in today's Weekly Standard online, is one that we've read in our quest to learn more about how Rick Perry would translate his experience as Texas Governor into the Presidency of the United States. 

Two Sisters

Don't Mess With Texas's Economic Record





One surefire way to tell that Rick Perry's entry into the presidential race is having a big impact is the sheer number of hit pieces that have been written against him in a 48-hour period. (See here, here, here, here...I could go on.)


I'm sure some of that is due to an oppo dump from other GOP candidates hoping to step on Perry's momentum. However, there's one theme from liberals that I suspect you'll hear a lot of, a la the latest Krugman column, which is the furious accusation that Texas' low taxes and business-friendly regulation haven't really created a lot of jobs:
  • What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states. I believe that the appropriate response to this insight is “Well, duh.” The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state

Krugman's paragraph here explains a lot about why "Keynesian" should probably be a bigger slur than "former Enron adviser." For one thing, job creation is not a zero-sum game. Texas hasn't created over 40 percent of the country's new jobs just by taking them away from other states. A lot of those jobs wouldn't exist, period, if Texas didn't create a tax a regulatory climate to encourage them -- Texas added 732,000 jobs in the last decade, and no other state created more than 100,000. If Krugman's unimpressed, that's because he's the one that's trading in fallacies here.


Further, it's revealing that Krugman offers up only the most facile comparisons between Texas and blue states. In a single sentence, he brags about Massachusetts unemployment rate and high rate of health insurance relative to Texas, when both states are significantly below the national average in unemployment. Further, Krugman doesn't note how significant differences in demographics or immigration might affect employment in these states. And Krugman sure as heck isn't going to mention this:
  • State officials have successfully increased health insurance coverage in the state: With only 2.6 percent of the population now lacking health insurance, its insurance rate is the highest in the nation. But high coverage levels have been achieved at a substantial price, and one that is expected to increase over time.
  • For the state’s policymakers, rapidly rising health-care costs are the central problem with the plan. Since 2006, the cost of the state’s insurance program has increased by 42 percent, or almost $600 million. According to an analysis by the Rand Corporation, “in the absence of policy change, health care spending in Massachusetts is projected to nearly double to $123 billion in 2020, increasing 8 percent faster than the state’s gross domestic product (GDP).”


This isn't exactly a surprise, but Krugman's being spectacularly dishonest here. He also fails to mention that Texas has twice closed massive budget deficits under Perry's tenure as governor -- without raising taxes. The fact that Texas has its fiscal house in order, unlike just about every other blue state, surely has something to do with Texas' economic growth. The reality is that just about every other blue state is a governing basket case when compared to Texas, and the comparison is revealing and instructive.


"Government isn't difficult in theory," Texas Republican Gov. Rick Perry told National Review in 2009. "Don't spend all the money, keep taxes low, have a fair and predictable regulatory climate, keep frivolous lawsuits to a minimum, and fund an accountable education system so that you have a skilled work force available. Then get the hell out of the way and let the private sector do what the private sector does best."


Perry doesn't have a Nobel Prize in economics, but despite Krugman's sophistry, I suspect that American voters know common sense when they hear it.

© Copyright 2011 The Weekly Standard LLC

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