Rick Perry and the Texas Miracle That Wasn't

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Scott Olson/Getty Images
Texas Governor Rick Perry on the campaign trail in Iowa.
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We're going to be hearing a lot in the next year or so about the 2009-2011 "Texas miracle," whereby Gov. Rick Perry (if I recall) took five loaves and two fish and transformed them into a cornucopia of jobs, even as, in the rest of the country, something like the opposite happened. According to Rick Perry, the reason Texas has thrived – since 2009, 37 percent of all new jobs in the United States have been created there – while the nation has floundered is: Rick Perry – specifically, his conservative economic policies (income tax, hands-off regulation, tort reform etc.).

It has to be said: that makes for a good story, especially at a time of 9 percent unemployment and economic anxiety, and naturally Perry is premising his presidential bid on the idea that he can take the lessons of Texas and apply them at the national level.

So, the questions of the hour are: is Perry responsible for the Texas miracle? If he is, can he work the same magic on the US of A?

The answers, as best I can tell from two excellent takes today, are: No and no.

Paul Krugman doesn't even buy that there is a Texas miracle. For one thing, unemployment there in June was 8.2 percent – nothing to brag about. Moreover, most of Texas' job growth is the result of population growth, fed by high birth rates, Mexican immigration, inward migration from other states, and relatively low housing costs. (Newcomers to the state bring the sweat of their brow and money to spend; a growing workforce produces low wage growth, which attracts businesses to the state. And so on.)

Did conservative economic policies encourage the population growth? Well, sort of. Low taxes and low wages will tend to attract businesses and workers. But, says Krugman, [w]hat 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.'"

In any event, how would you replicate this on the national level? As Krugman points out, "every state can’t lure jobs away from every other state," and the Washington Post's Brad Plumer, in similar vein, notes, "It’s one thing for a single state’s population to grow at a faster-than-average rate by siphoning people from elsewhere, but how do you do that for the United States as a whole."

But there's more to the Texas miracle than population growth, and Plumer does a great job of breaking it down. He concludes that Perry deserves some credit for his state's success, but only some. Lax business regulations may have attracted businesses to Texas, but they were in place before he showed up; Perry-championed tort reform brought in 20,000 physicians into Texas, but has done nothing to control health care costs; Texas had a less severe housing crash than the rest of the country, but that was because of higher (property) taxes and tight regulation; an oil-and-gas boom -- obviously outside of Perry's control – contributed mightily to Texas' economic surge; oh, and over the past two years almost half of the state’s job growth came in the education, health care, and government sectors, thanks in large part to President Obama's stimulus largesse – prompting this wry conclusion:

All told, the Texas miracle is a complicated story. Some of the state’s successes — in attracting low-wage workers and doctors and businesses from other states — are difficult or impossible to replicate on a national level. On the other hand, Perry could conceivably speak out on housing policy and the need to reform local zoning restrictions. Or he could propose a massive new federal stimulus program, of the sort that has kept Texas afloat over the last two years. Though, for some odd reason, that latter idea hasn’t made its way into his stump speech yet.

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