It's Time to Mess With Texas

You have probably already heard quite a bit from Governor Rick Perry of Texas.  If not, you're most certainly about to.  He came in second only to Michele Bachmann...

Sorry, needed a moment since I literally shat myself while doing a spit take at the same time.  I think we can officially call the "Why Don't Some People Take Republican Politics Seriously?" mystery solved.

But back to my point... Gov. Rick Perry seems poised to be one of the top contenders vying for the Republican 2012 nomination.  Honestly, I feel like Bachmann will fade in time, as many past straw poll winners do, because I just don't think she can hold her own on the national stage.  Gov. Tim Pawlenty of Minnesota, who some considered one of the more tolerable, moderate GOP possibilities, dropped out.  That leaves Mitt Romney.  So I wouldn't be shocked if we have a Perry/Romney off for the GOP ticket.

Unless, and stay with me on this one, Sarah Palin swoops in off her bus and announces her candidacy for President in a total game-changing way like when a bird crashes into a window that it can't see.

Either way, one thing you're going to hear a lot about is the Texas Miracle, essentially Gov. Perry's claim that Texas has managed to create jobs despite our tanking economy.  Since Gov. Perry was physically located in the same geographical area as this claimed job creation, he must be responsible for it and therefore can bring that magic healing power to the greater nation if planted into the right geographical space, like Washington D.C.

Paul Krugman, famous communist and America-hater who also happens to have a PhD in economics, a nobel prize for his work, and teaching stints at Princeton and the London School of Economics, explored the Texas Miracle today in the New York Times.  I've bolded the words in the previous sentence that can be triggers for the hard right to discredit someone's input.

First, a little background about the Texas Miracle, courtesy of CBS:

How Rick Perry Created the Texas Miracle

Some points to consider.  Gov. Perry stated that Texas leads the nation in job creation, and it does, having created hundreds of thousands of more jobs than any other state.  Obviously, given our economic climate, there isn't another issue more important to many voters out there.  One seemingly positive quote from the CBS article:

"We're hiring, we can't hire people fast enough," said Jeff Brown of California-based EA video games. He said the company is adding 300 jobs in Austin, Texas, partly because of low costs, but also because of Perry's three trips to persuade EA to move.

Phrases like "we can't hire people fast enough" probably jump off the page so brightly in these dim economic times that you could be forgiven for ignoring the "persuade EA to move."  So first, Texas may not necessarily be creating jobs, they poach them.  When Gov. Scott Walker of Wisconsin promised to create 250,000 jobs, a promise that may have gotten him elected, he went the same route to help meet that goal.  He approached companies outside of Wisconsin and offered incentives to relocate.  In the specific case quote above, EA Games ditched their California location, pulled those jobs out of that state, and gave them to Texas.  Not quite job creation, but still good for the people of Texas.

But in comes Dr. Krugman to explore the hundreds of thousands of new jobs through an economic lens, specifically in relation to population growth.  Turns out that Texas unemployment numbers aren't all that great.

Texas has an increasing population for a few reasons.  First, it's pretty cheap to live there.  Second, it gets a lot of immigrants from Mexico.  Third, it gets retirees because of the warm weather.  Fourth, it has a pretty high birth rate compared to other states.  Krugman's article -

The Texas Unmiracle

- examines what this means in the real world.

But what does population growth have to do with job growth? Well, the high rate of population growth translates into above-average job growth through a couple of channels. Many of the people moving to Texas — retirees in search of warm winters, middle-class Mexicans in search of a safer life — bring purchasing power that leads to greater local employment. At the same time, the rapid growth in the Texas work force keeps wages low — almost 10 percent of Texan workers earn the minimum wage or less, well above the national average — and these low wages give corporations an incentive to move production to the Lone Star State.

So Texas tends, in good years and bad, to have higher job growth than the rest of America. But it needs lots of new jobs just to keep up with its rising population — and as those unemployment comparisons show, recent employment growth has fallen well short of what’s needed.

How short?  He breaks it down in a graph on his NY Times blog:

Turns out Texas unemployment numbers fall in line with a lot of other states (in this case specifically New York and Massachusetts).  So while jobs are created, they tend to be of the crappy minimum wage variety which you can't really support a family on, and there still aren't enough of them to keep the economic picture from looking like any other state in the country.  Still job creation is job creation, and we need that magic on a national level, to which Krugman says:

Still, does Texas job growth point the way to faster job growth in the nation as a whole? No.

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.

Gov. Perry has a specific system in place for his job growth.  First, unprotected sex and babies plus hot weather for the old folks.  Add to that massively government subsidies for the oil industry to shore up a large chunk of the jobs and their spillover.  Finally add jobs taken from other states through the promise of lower wages and less regulation, and presto, you get the same net effect as most other states except with lower wages and fewer safety nets.

The truth of the matter is that many economists don't believe politicians can create jobs, they can only really create an atmosphere conducive to job creation.  NPR's Planet Money covered this topic in their podcast:

How Do You Create a Job?

The podcast interviews Princeton economist Orley Ashenfelter... and it looks like I have to bold some words again for right-wing discrediting.  He states that the basics of job creation is operating in a situation where the cost for hiring a person is less than the amount of profit to be made from that person's efforts.   The government can offer perks that help make that profit, often in the form of lower corporate tax rates or deregulating.  But raising taxes, according to Ashenfelter, can also help in other ways, by tackling crime rates (especially in urban areas), or creating an educational system that produces exceptional employees.  

In the end, Ashenfelter states that both more and less government can help with job growth, with the goal being to have a government that runs well, not bigger or smaller.  So there you have it, we're screwed.