In defense of Texas jobs performance?

I have now read Matthias Shapiro (not a Perry supporter by the way) and he seems to have the best treatment so far.  One excerpt:

Since the recession started hourly wages in Texas have increased at a 6th fastest pace in the nation.

Another:

We can see that Texas has grown the fastest, having increased jobs by 2.2% since the recession started. I want to take a moment and point out that second place is held by North Dakota. I added North Dakota to my list of states  to show something very important. North Dakota currently has the lowest unemployment rate of any state at 3.2%. And yet Texas is adding jobs at a faster rate than North Dakota. How can this be?

The reason is that people are flocking to Texas in massive numbers…

As you can see, Texas isn’t just the fastest growing… it’s growing over twice as fast as the second fastest state and three times as fast as the third. Given that Texas is (to borrow a technical term) f***ing huge, this growth is incredible.

People are flocking to Texas in massive numbers. This is speculative, but it *seems* that people are moving to Texas looking for jobs rather than moving to Texas for a job they already have lined up. This would explain why Texas is adding jobs faster than any other state but still has a relatively high unemployment rate.

This piece encompasses, and responds to, all of the “Texas critiques” we have seen so far.  And there are good graphs at the link.  For the pointer I thank Nate Silver, a tough cookie when it comes to data; he calls it a “great piece.”

Comments

Reminds me of when Massachusetts Gov. Michael Dukakis got the 1988 Democratic nomination because of the "Massachusetts Miracle" -- the minicomputer boom of the mid-1980s.

After awhile, however, DEC, Wang, Prime, etc. were obsolete. Dukakis didn't have much to do with their rise or fall.

What newfangled industry is booming in Texas but not the rest of the country?

Does it have to be newfangled. If you limit it to that, you are dictating the answer.

But, if you ask: what unique industries that Texas has over other non-energy states, you may have answered your question and not misdirected it to the newfangled.

The scary lesson for Democrats in comparing Texas to California is that the massive immigration from Mexico that all liberals these days seem to favor means the _only_ system that consistently works with a low skill population is a Texas-style one of low tax, low spend, low regulate, and conservative values.

The scary lesson for Republicans is that demographic change means that Texas is likely to eventually follow California (which voted GOP in 9 of 10 presidential elections from 1952-88) into the Democrats' column, which would appear to permanently put the White House out of reach for Republicans.

I can understand about "low tax, low spend, low regulate" but what do "conservative values" have to do anything at all with the system working?

Look at crime rates or test scores by race: blacks and Hispanics do pretty well both absolutely and relative to whites in Texas, a state with a dominant conservative white majority. Non-Asian Minorities tend to do worse in socially liberal states. Compare statistics for blacks in Texas cities to D.C. or Milwaukee or Minneapolis or libertine New Orleans before the flood. Compare the homicide rates for Hispanics in El Paso or San Antonio to Los Angeles.

In the 21st Century, Non-Asian Minorities tend to have the best outcomes in cultures dominated by white social conservatives (e.g., blacks do relatively well in the Army, and enlist in large numbers). Whites and Asians tend to thrive more in socially liberal cultures.

@Steve:

I'm puzzled that if white social conservatives have such a salutary effects on minority blacks why not on themselves? Total violent crime in Texas (and for that matter most other Southern states) is far worse than the "socially liberal" northern sates.

e.g. 2007 violent crime rate per 100,000 inhabitants
Texas 510.
Wisconsin 290
Minnesota 288
etc.

Did you adjust for any confounding population factors? Ethnicity? Education? Income?

One reason White Texans tend to be conservative is because they tend toward hell-raising themselves. White Minnesotans tend to be liberal because they tend to be nice Prairie Home Companion types. (In Texas, the most liberal part of the state was traditionally the central Hill Country settled by Germans.)

Granted, this is a paradox, but it's almost a self-explanatory one that explains much about politics in America.

Values of hard work, self-dependence, honesty, stable and happy familes and workers, would tend to lead to higher productivity and less fraudulent or unproductive extraction.

Which is why New York State is so productive. But how is Texas, a corrupt oil state doing so well? Oh yeah, they aren't:

http://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

http://en.wikipedia.org/wiki/List_of_U.S._states_by_unemployment_rate

Funny how slightly lower unemployment than other states still doesn't help regular people. The point of gov't isn't to win some mythical economic war. It's to 'promote the general welfare' and Texas is a failed state by that measure, undereducated, underpaid and malnourished.

Couldn't be bothered to read the linked article, huh?

People frequently predict that the White House will be permanently out of reach for one party or another due to some demographic shift. But the fact is, these sorts of things happen all the time, and the parties adapt so that they can remain electable. For example, states like California and Massachusetts frequently have Republican governors, because the Republican party in those states has shifted left to remain viable.

Of course, such a shift would still be a bad thing for conservatives.

Sure. But consider the lumpiness of Electoral Voters. If you start off in the Presidential likely down almost 100 electoral votes due to demographic changes in California and Texas, then you've got to run the table to get to 270 of the other 440 or whatever Electoral Votes. What it means is that instead of a situation where you figure that if you get 50.1% of the national two party popular vote, you'll likely win the Electoral College, you'll need 51% of the popular vote to have a fifty-fifty chance of winning the Electoral Vote. Then it will be 52%, then 54% you need just to have a shot at winning the Electoral College.

California used to be a swing state, not anymore. Mass was never a swing state. The CA GOP, which is one of the more incompetent state parties out there, totally failed to adapt to a changing economy there. Immigrants are a huge part of the economy, whether at the high-end (Silicon Valley) or the low-end (Central Valley). To be seen as anti-immigrant Orange County country-clubbers is a death sentence, and that is what's happened.

Don't worry, Obama has fixed that.

Perhaps Republicans should stop doing everything they can to alienate black and hispanic voters, like not sign pledges that make ridiculous assertions about slavery or stop passing racial profiling laws disguised as immigration reform. Over the past few years, the dominant mode of "conservative", and I put that in quotations for a reason, expression has been something along the lines of, 'America is a white Christian nation and everyone else is just here by our good graces.' There are plenty of folks who don't fall into one of those categories who might well find an ideological home in the Republican party where it not for so many Republicans defaulting to some form of white populism.

Tejanos are not like Hispanics in California. It would be a mistake to assume they follow the same voting pattern.

"However, take the energy sector completely out of the equation and Texas is still growing faster than any other state. This indicates to us that the energy sector is not a single sector saving Texas from the same economic fate as the rest of the states. It's not hurting, but Texas would still be growing like a weed without it."

He doesn't discuss how he "takes the energy sector completely out of the equation". He seems to say that energy created 25% of the new jobs last year. If the energy sector is booming and hiring people, it will also indirectly create other non-energy related jobs.
It would interesting to see an estimate for this.

Some people don't believe in multipliers, that's why, unless its for a new baseball or football stadium funded by public money, in which case they do believe in multipliers to subsidize construction.

Those people are called idiots.

Also, if you want to see what multiplier effect energy has, look at the early 80's when energy prices collapsed.

If people really were empiricists about this, they would look at regional growth within Texas and areas associated with energy production (Midland), oil services (Houston), and run a scan of the help wanted adds to see what mix of employment/employers are in the respective areas. They could also use decenial census data and establishment data to see what naic codes increased in revenue and sales, and also which ones grew in employment. They could do event studies--what happened in 80's when opec collapsed--to get a sense of energy dependency as well as federal dependency for military contracts.

Overall, I was not impressed with Shapiro's work.

Yes, why didn't he spend a full year on the ground in Texas trying to debunk the conclusion you came to reading a Krugman column for 30 seconds in your easy chair??

He should have just said it was unexceptional and used the material in the Fiscal Times article. You can do some research on your own, Cliff, as evidently you have made up your mind. Mine is open, but what I've seen, including Shapiro's, is not impressive.

here is the Fiscal Times article I was referring to: http://www.thefiscaltimes.com/Articles/2011/08/12/Rick-Perry-and-the-Myth-of-the-Texas-Miracle.aspx#page1

"Moreover, its recent performance is a classic case of “all hat, no cattle.” Texas lost 34,000 jobs in June, causing its unemployment rate to jump to 8.2 percent, which ranks it 25th among states and leaving it worse off than its immediate neighbors. Even as Texas’ unemployment rate rose along the lines of the entire country, the neighboring states of Louisiana and New Mexico saw their unemployment rates fall to 7.8 percent and 6.8 percent, respectively."

"The state added 45,000 natural resource extraction jobs since the jobs trough of the recession. That was 15 percent of all the new jobs added in the state. The oil price bubble has also created tens of thousands of new business service jobs, which are counted separately.

Texas Gov. Rick Perry, who ends his shadow run for the White House this weekend by announcing his bid for the GOP presidential nomination, has been touting the success of the Lone Star State’s economy, which, he says has done significantly better than the rest of the country through the Great Recession. Perry’s announcement comes exactly in time for this weekend’s Iowa Straw Poll.

Election 2012 Complete Coverage “We keep adding jobs while others are losing them left and right,” he told the Republican Leadership Conference during its mid-June meeting in New Orleans. Some analysts say that Perry will enjoy a strong advantage over others in the crowded Republican field because of his state’s near-miraculous record of job creation throughout one of the worst economic periods in U.S. history.

There’s just one problem with that portrayal. While Texas has created more jobs than any other state in the past two years, the increase is far less than advertised. The rate of increase is not much higher than a number of other states, including former rustbelt centers like Pennsylvania or liberal sanctuaries like Vermont.

Moreover, its recent performance is a classic case of “all hat, no cattle.” Texas lost 34,000 jobs in June, causing its unemployment rate to jump to 8.2 percent, which ranks it 25th among states and leaving it worse off than its immediate neighbors. Even as Texas’ unemployment rate rose along the lines of the entire country, the neighboring states of Louisiana and New Mexico saw their unemployment rates fall to 7.8 percent and 6.8 percent, respectively.

Moreover, to the extent Texas has succeeded in adding jobs over the past two years, most of its good fortune rests on conditions that are not replicable elsewhere. Soaring oil prices have provided a substantial number of new jobs and tax revenue since it is the nation’s leading oil- producing state, even as those $4-a-gallon gas prices drained consumers nationwide and put pressure on other states’ budgets. An influx of new government defense spending has also pumped up revenue, while the state has used oil revenue to postpone a sharp cutback in state and local government employment, which is about to hit in full force.

Two other factors that may not play well with Republican Party primary voters also contributed to the Texas economic performance over the last decade and through the Great Recession. According to a recent analysis in the Ft. Worth Star-Telegram, state debt grew by 282 percent over the last decade, a slightly faster rate of increase than the ostensibly more profligate federal government. Local government debt in Texas grew by a heady 220 percent over the same period.

Texas also benefited during the downturn by having tighter housing finance rules – a stark contrast to the business-friendly regulatory environment Perry likes to tout. After the savings and loan crisis of the early 1990s, which hit Texas hard, the state legislature prohibited “cash out” mortgages. The state’s tough mortgage rules kept housing prices in check and saved it from the huge price declines and foreclosures that devastated many other areas of the country. Still, construction employment fell by 95,000 jobs during the recession and remains 14 percent below its pre-recession peak.

“Anyone who thinks the relatively strong performance in Texas has much to do with state government policy is wrong, except when it comes to housing, where regulation helped the state,” said Howard Wial, an economist and fellow at the Brookings Institution’s Metropolitan Policy Program. “In Texas, the worst is yet to come.”

After assuming the seat held by George W. Bush in 2000, Perry, 61, has been elected to three full terms as Texas Governor, making him the longest serving chief executive in state history. Married with two grown children, he has won plaudits from social and economic conservatives alike for his strong anti-abortion, anti-tax and anti-regulation stands. He also takes pride in his willingness to lure businesses from other states by offering special tax breaks. Asked by a television interviewer why some companies had relocated to Texas from California, he replied, “They like the smell of freedom – freedom from taxation.”

The recession officially ended in June 2009, but job declines continued across the country for most of the next six months, including in Texas. But after oil prices soared to nearly $150 a barrel in 2008 and remained high for most of the past two years, the Texas oil patch and the global oil services industry centered in Houston staged a strong recovery.

The state added 45,000 natural resource extraction jobs since the jobs trough of the recession. That was 15 percent of all the new jobs added in the state. The oil price bubble has also created tens of thousands of new business service jobs, which are counted separately."

--------------------------------------------------------------------------------

“We have a huge oil and gas service industry; we’re the world’s center,” said Mine Yucel, a senior regional economist at the Federal Reserve Board of Dallas. “If oil and gas prices are high, that benefits us because of demand for our services, not just from Texas, but from the entire world.”

It also benefited the Texas state government treasury, which was able to replenish its rainy day fund with $6 billion after using $3 billion in unanticipated severance taxes to make up for the recession-driven shortfall in the last biennial budget. “Luckily, Texas has underneath it a great deal of oil and gas,” said Dick Lavine, the senior fiscal analyst for the Center for Public Policy Priorities, an Austin-based think tank. “There’s nothing like the proceeds from $100 barrel oil flowing straight into the budget.”

The result is that while state and local governments nationwide have eliminated over 400,000 jobs in the past year, government employment in Texas actually grew. There are now 1.66 million state and local government employees in Texas, an increase of 66,000 in the past two-and-a-half years.

Yet that didn’t help Texas avoid losing 132,000 manufacturing jobs or 14 percent of the total between the onset of the recession and December 2009. Since the recovery began, the state has regained only 11,000 of those jobs. The information technology sector also remains well below its pre-recession peaks.

“Compared to the rest of the country, we did better,” said the Fed’s Yucel. “But we’re not immune. The oil and gas has offset the losses in those other sectors.”

Continued strong military spending at the federal level also benefits Texas, especially its El Paso and San Antonio metropolitan areas. The Army over the past three years has relocated about 14,000 troops to Fort Bliss, which is outside El Paso, and plans to permanently relocate an additional 6,000 troops there in the next two years.

An earlier version of this article appeared in The Fiscal Times on July 8, 2011.

Oh hell guys, Bill wasn't impressed! Hear that Shapiro?

You weren't impressed because Shapiro's work went against your ideological views- i'm sure you would have been perfectly willing to accept Krugman's original analysis which was much, much more crude and simplistic.

Well, Prag, what did you disagree with in the statistics in the Fiscal Times article?

Matthias spends the whole post arguing that Texas is indeed a miracle, but that's the wrong question to be asking. What matters is whether Perry can credibly scale up the "Texas miracle" to the whole country with conservative economic policies. But Texas has been successful in attracting jobs because (1) lots of open space (unlike, say, New York City) and good land use policy (unlike, say, California) and (2) lower corporate tax rates, which allow Texas to siphon jobs from the rest of the country. Nothing in Matthias' analysis persuades me that either of these explanations for Texas' success can yield an employment miracle for the whole country, so I remain unpersuaded.

Matthias' advice to anti-Perry advocates is "Give up talking about Texas jobs," but anti-Perry advocates will have every reason to keep talking about them if extending the Texas miracle is the center of Perry's platform.

It would have been a miracle if Perry's pray-for-rain gathering resulted in rain.

The oil and gas in Texas is geology, and the rising in oil prices is global demand from rapidly developing nations.

And Texas having long roots in Mexico makes it far more tolerant of immigrants, it seems.

So, can Perry come up with national policies for the nation to bring jobs from Mexico into the USA by cutting labor costs and living costs below Mexico so Mexican business men will move to the US like California business men have been moving to Texas and bringing the jobs with them?

Of course, how many Americans want the US labor market to pay like Mexico.

Interesting points about the limitations of applying these types of policies on a national scale.

However, I don't see this argument working politically at all. The problem is, it starts with "yes, Perry's policies worked, but..." At least that is how it will sound to people. The main thing it will communicate is even the Democrats conceded Perry's success. Then contrast that with how Obama's economic record will be perceived.

Yes, you're absolutely right. I believe it's crucial for Obama to have implemented economic policies that he can claim to have "worked" by November, but he's unwilling to try and it's probably already too late.

" (2) lower corporate tax rates, which allow Texas to siphon jobs from the rest of the country. "
Couldn't he make the argument that lowering Federal corporate tax rates would allow the U.S. to siphon jobs from other countries? Canada has dropped their corporate tax rate from 21% to 15%. It's hard to imagine that doesn't tempt some companies to move north of the border.

You could argue anything, but the question is empirical. Have previous cuts in corporate tax rate caused significant international migration of firms to the US? How elastic are companies to tax rate changes internationally. The barriers to a firm moving from California to Texas are far lower than one moving from, say, Italy to USA. In fact, I am curious as to which large firms (if any) have migrated headquarters across national borders.

Also, is where a firm keep jobs also have to be where it pays corporate taxes? Perhaps the corporate HQ migration in response to a federal corporate tax cut wold be jobless?

"Have previous cuts in corporate tax rate caused significant international migration of firms to the US?"

I can't find a table of past U.S. corporate rates by year, but I imagine the world was a considerably different place last time they were 15 or 20% so I'd be surprised if it was applicable to the current economic environment. Ireland> certainly seems to think having the lowest corporate tax rate was a key to their ability to attract business.

Our corporate tax rates are already that low, due to thousands of tax cuts and other corporate benefits. Corporate welfare in this country is out of hand, it's a nightmare to manage, it helps Congress stay crooked (millions in 'donations' for Boehner, Cantor and Ryan) and worse, it's unreliable and unpredictable. It's anti-capitalistic because it's based on a closed anti-competitive political system. GE paid nothing in taxes! That's not a good outcome. This recent infatuation with tax cuts is unproven and unwise, we haven't been creating jobs in our country outside of the fraudulent banking/mortgage industry. So RECORD low taxes aren't working, and Republicans (and their conservative economists) need to explain why.

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/01/AR2010010101196.html

I think it's obvious why, just check the news. Corporations take their tax cuts, give themselves (the CEOS and shareholders) millions more every year and do layoffs. There is no incentive to hire anyone, since their profits aren't taxed properly. Look at banking, broadband, health care, electronics, everything is becoming more centralized and less competitive and China is leveraging their absolute control over their domestic economy to take higher and higher value jobs. Our national decline shouldn't be a mystery.

And, let's be serious, Perry isn't an economic genius or innovator. That's just silly. Even if he was successful in Texas, who would trust his credentials to do it again? No one.

You make a very good point. Factors that make Texas a 'miracle' are not Federal issues, for the most part. Does anyone think Rick Perry is going to ride into Washington and strike down California red tape laws?

The only "Texas critique" he fails to address is one that I think can be easily addressed, the "climate/air conditioning/location" effect. It's easily disposed of by noting that Texas is growing much faster than its neighbors from New Mexico to Alabama.

Sure, air conditioning has undoubtedly made the South and Sunbelt more livable, but all the states there have not performed nearly equally. (Louisiana has its share of energy as well, for example.)

"Louisiana has it's share of energy as well"

What most people outside the industry don't realize is that these days most of the oil jobs in Houston are about energy projects taking place outside the state of Texas. The Gulf of Mexico is mostly in federal waters, for instance. Energy knowledge workers in Houston work on projects all over the world. What Manhattan is for finance, Houston is for energy. Yeah, the shale plays have been a boast recently, but Houston as an energy hub is more an artifact of history than a function of the local geology. New Orleans isn't the bigger energy hub due to factors other than current proximity to hydrocarbons.

There's a fundamental reason that environmentalist restrictions are greater in California than in Texas: the environment is more well-worth conserving in California. It's not a coincidence that the organized environmental movement (e.g., the Sierra Club and the Save the Redwoods League) traces heavily back to Northern California a century ago and not to Texas: Northern California is a lot prettier than Texas.

On the whole, California is prettier. But you're only looking at Northern California, and only being selective there. What about the vast expanse of desert in SoCal? Or the Central Valley? Or inland areas in L.A. and the Bay Area? They're nice (I grew up in the East Bay), but they're not a national treasure. They're not any nicer than Texas Hill Country, although the weather is way better.

Looks as if the Koch brothers have decided to back Perry.

Looks like Soros has decided to back Obama.

People would think it odd that historians bring up the Cival War during these times. That's because today's history books state the War was all about slavery, nothing else. Though slavery was undoubtedly a key factor the overriding cause was States Rights vs a heavy handed federal government. What does this have to do with the coming "Texas Battle" about to explode on our TV screens?

Everything.

Oh, puh-lease. Whenever the South was forced to choose between states rights and slavery, they chose the latter. Fugitive Slave Act? Senate gag-bill? Or what about forced incarcerations in South Carolina? When a free black sailor from a Northern state docked in Charleston harbor, he was forced to spend the duration in jail until the ship left port.

"Though slavery was undoubtedly a key factor the overriding cause was States Rights vs a heavy handed federal government."

Bull. Look up the speeches by the fire-eaters themselves. The only heavy hand of the government that they did not like was the one that would not let them export slavery to the west, to Cuba, and anywhere up North or West a slave might escape to. They loved using the heavy hand of the federal government to throw their weight around, when they could.

Treason in defense of slavery - the raison d'etre of the Confederacy. Said Confederacy consisting of traitorous sister-rapers and the fools they got to fight on their behalf.

Why is local democracy treason?

What's not treason these days?

We are all down because Texas is up. Treasonous bastards!

Because it was not democracy, but tyranny, at the local level. And it was treason at the federal level. These are not complicated concepts, nor is it a historical issue subject to debate. Really, it is not.

It was not treason, it was secession. Just like the American colonists who unilaterally seceded from Britain.

The most important fact in the article is "Texas ... has a ... high unemployment rate."

So remind me, how is Krugman so far off the mark? He says population growth is responsible more than anything else, which is what Shapiro identifies as well. We could argue back and forth about why people are moving to the state, but that's probably a much harder question to answer.

So if one state were to forcibly move a large number of people to their state, then they will have a boom in employment? Misidentifying cause and effect seems being pretty far off the mark.

Well, maybe.

But let's remember that population growth isn't only due to people coming from other states. It's also about people who come from other countries, such as that one that's right along the border, and then have children once they are there. Isn't it common knowledge that non-whites have children at much higher rates than whites?

Who'd have ever guessed that liberal Keynesians would become such red-hot converts to Say's Law?

Shapiro's analysis is interesting but incomplete. Notably, he points out that energy is "only" responsible for 25% of Texas' growth numbers, but he doesn't fill in the rest. Ryan Avent does:

http://www.economist.com/blogs/freeexchange/2011/08/labour-markets-0

The rest is government, education, and health care. All are completely or mostly tax-funded and highly regulated. I don't see how this helps Perry at all, since he is running on lowering taxes, cutting spending, and unwinding regulations.

What is interesting about Texas, and worth learning from IMO, is their avoidance of a real estate bubble, and the massive loss of construction jobs that followed it. But that has nothing to do with the argument Perry is making.

A good way to test your theory would be to compare Texas to California, Arizona, and New Mexico.

Also see John Thacker's comment

kvm, That's not a comparison if the difference is energy production.

What you could use is decenial census data, census establishments data, naic codes (for industry mix and revenue), employment growth by industry, and run a controlled experiment controlling for defense expenditures and energy industries. You could also do an event analysis, looking at what happened to the Tex economy in the 80's when energy collapsed.

Finally, I would be looking at value added, and not just employment. When you get in ag intensive regions, you have high employment of largely migrant farm labor.

I don't think anyone believe it's all energy production.

Nobody seems to argue that, for whatever reason why people are moving there, population growth is a big factor in the addition of jobs. I seem to remember reading that about half of the growth comes from people from other states, but it's not clear what's starting that process or continuing it. It's certainly a lot of factors, but what's the biggest?

Yesterday, in a similar thread, I gave the following link: http://www.census.gov/hhes/migration/. The information is from 2009, but that's the last year that's available. The first spreadsheet of state-to-state migration flows is interesting. Go to row 66, which is the "Current residence in" for Texas. Each column gives "Residence 1 year ago in" information for various states. Take a look at the numbers for each state. Three of the most commonly cited examples of high states that people are fleeing are New York, California, and Illinois; the numbers for each are 12,973, 61,270, and 23,156. By contrast, let's look at the numbers for Colorado, Arizona, Georgia, Florida, and North Carolina: 19,748, 21,263, 19,389, 38,150, and 16,530. Are any of those states particularly high tax or supposedly anti-business? Is it really that much easier to move from Florida or Georgia to Texas than it is to move from New York? Or, more broadly, why does a state like Georgia, have more people leaving for Texas when it's a much smaller state than New York and, presumably, lower taxes?

Or are these not the right numbers to look at or the right comparison to make?

You might want to look at the percentage of population leaving a state going to Texas and rerun the numbers. Cal, Ill and NY are high pop states. Also, some people move retire, and do not enter the labor force but create labor demand. So, for the Cal, Ill, NY numbers you might want to look at transfer age. Some of the other states are high military pop states, so some of the migration may be from that as the Fiscal Times article points out.

I just haven't seen anything that supports the claim of high non-energy growth or state specific policies doing anything, since the unemployment is about average for all states.

Yes, and in Texas you can walk down the street drinking a beer, as you can in most other civilized parts of the world, like Brazil.

But in Texas, a woman can appear topless in public. The best thing about all the immigration to Texas is that it'll dilute all the religion of the damnBaptists and damnMethodists that holds sway over the flyover ranchland.

And one can hope it dilutes the rampant socialism of the state capital, Austin, as well.

"Yes, and in Texas you can walk down the street drinking a beer." I'm not so sure about this. Its definitely against the law in Dallas. During the St. Patrick's Day parade, they'd often turn somewhat of a blind eye and make a half-hearted attempt to make people pour out their beers. I didn't go in 2011, but word was, that they were going to step it up and not just ask people to pour out their drinks, but actually give them citations. I don't know what actually ended up happening though.

http://frontburner.dmagazine.com/2011/03/09/call-off-the-greenville-avenue-st-patricks-day-parade/

Maybe other places in Texas you can indeed walk down the street drinking, but its definitely not something universal to all of Texas.

At the state level, it's legal and municipalities need approval from TABC to pass laws restricting open containers in public.

It's no coincidence here; Houston is the energy hub of the US, and North Dakota is where the latest oil boom is. One needs to look only at the Bakken shale production and forecasts to realize why these two states are doing so well.

In my part of Texas (Dallas), you hear a lot about the so-called "$30k Millionaires." These are people that make $30k a year, but spend like they're millionaires (mainly to impress other people). They lease fancy cars, buy fancy clothes, and go to fancy restaurants that they can't afford. Reviews on Yelp.com often reference/complain about them. There's a clothing company (www.30kdm.com) that markets t-shirts along these lines (eg: "Keep Dallas Pretentious: Support your own materialism). Some people even made a movie about it: http://www.30kmillionaires.com/

I see evidence of it everywhere. I don't know if its widespread outside of Dallas or just a local thing. I definitely know quite a few unemployed people who live pretty lavish lifestyles based on credit cards, so I really wasn't surprised when it was revealed earlier this year that out of the 10 cities with the highest levels of per capita credit card debt, 3 of them were in Texas:

http://money.cnn.com/2011/03/04/pf/cities_credit_card_debt/index.htm

And note that doesn't even include Dallas, the home of the $30k Millionaires. And the cities that are mentioned, aren't small ones. 2 of them are 2 of the 10 biggest cities in the country. Multiply those per capita amounts by the city's population and you're getting close to some decent sized numbers. I've always been curious to know the role consumer spending plays in the Texas economy, and to what extent its based on credit. Maybe its insignificant, but maybe it isn't.

Texas has around the third highest property taxes in the nation. (you typically see the average amount calculated somewhere to be around 1.7% - 1.8%).

http://taxes.about.com/od/statetaxes/a/property-taxes-best-and-worst-states.htm

Of course, since property prices are lower (mainly due to an abundance of land and less zoning restrictions), the overall amount you pay isn't as bad:

http://articles.moneycentral.msn.com/Taxes/no-map_best-and-worst-taxes-by-state.aspx

And, higher property taxes are offset by the lack of a state income tax, so overall, the tax burden is less. But still, when I talk to people in the real estate business here in Texas, they often cite the high property tax rates as one (of many) reasons why Texas didn't experience a big housing boom and bust. If you're inclined (like I am) to view the lack of a housing bubble as one of the reasons for the "Texas Miracle" determining the effect of those property taxes may be an interesting exercise.

You are absolutely correct. Most people buy a home based on "how much can I afford every month" vs. renting. And if property taxes or homeowners insurance is high (like in hurricane zone cities), then it will depress prices. I lived in Omaha where that "red state" paired very high income taxes (~7%) with really awful property taxes (2.5% - 3.0%) -- Wisconsin does this too. Result: depressed property prices. When I moved from there to Colorado, my home affordability figure went up 35%.

I think you also have to ask what is the composition of Texas revenue from severance taxes that are unavailable in other states as well.

The lack of a housing bubble is also partly the responsibility of the fact that cash out refis are extremely difficult in Texas as the state constitution (yes, this is in the constitution section 50(a)(6)) prohibits home equity loans that would place your debt burden at greater than 80% LTV.

The question you need to ask re: Texas, is why it has not been the leading economic power in the country for the last 40 years. IIRC, it has never had an income tax. It has always been light on regulations. Why does it prosper during our Great Recession, but not so much in the past? Bear in mind, Texas starts with the big advantage of its energy sector.

Does this mean that when the economy improves, it becomes just another state?

Steve

This is a day late and a dollar short, but I finally wrote about this. Quick summary:
I keep reading about the number of jobs created in Texas, and I read that the unemployment rate has gone up, but I haven't seen anybody put that together: of the 347,249 net gain in the Texas workforce between 6/09 and 6/11, 24.7% are unemployed - 2.7 times the overall national average.
Another point: that the new jobs in Texas are at the low end of the payscale has less to do with Texas than it does with the fact that the less employed have been hit harder by job losses. With disproportionately more less-educated people having lost jobs, we should not be surprised when more less-educated people now get them back.

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