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Should We Envy Texas?

Ross Douthat has a strange column today arguing that Texas -- yes, Texas -- represents the sort of "model" economy that Barack Obama promised but can't quite seem to achieve. "The president wants to govern America like a blue state," writes Douthat. "But for that to work, he’ll need the nation’s economy to start performing more like Texas."

There are two problems with this column. The first is that it's wrong. The second is that it's misleading.

Let's start with the wrong. Red states are not, as Ross implies, obviously outperforming blue states. On June 2nd, the Bureau of Economic Analysis released this map showing the 2007-2008 changes in GDP across the states. It doesn't look a whole lot like the electoral map:

gsp0609.GIF

The BEA separates the states into five quintiles. The top performers -- that is to say, the 10 states (11, as the District is included) exhibiting the most GDP growth between 2007 and 2008 -- are Washington, Wyoming, North Dakota, South Dakota, D.C., West Virginia, Iowa, Kansas, Oklahoma, New Mexico, and Colorado. Five states that went for Obama, six that went for McCain.

Texas, you may notice, doesn't even appear on that list. It's in the second quintile of growers. Along with New York, Vermont, Massachusetts, New Hampshire, Minnesota, Mississippi, Montana, Utah, and Oregon. Six states that went for Obama. Four that went for McCain. And to put this really clearly, the most recent BEA data show that Texas's per-capita GDP has shrunk by $11 since 2007. In Massachusetts, it's grown by $700. Compare that to Douthat's contention that Obama is "pushing a blue-state agenda during a recession that’s exposed some of the blue-state model’s weaknesses, and some of the red-state model’s strengths."

But let's talk about Texas for a second. "The Lone Star kept growing well after the country had dipped into recession," writes Douthat. "Its unemployment rate and foreclosure rate are both well below the national average. It’s one of only six states that didn’t run budget deficits in 2009." Texas isn't alone in any of that, really. About 24 states have unemployment and foreclosure rates beneath the national average. Not all of them are governed by Republicans or voted for McCain. Texas's balanced budget is a more interesting phenomenon, however. Douthat doesn't say why Texas managed to keep its books so clean. But I'd bet it has something to do with these numbers:

Texasvsamerica.jpg

Compared with, well, most everyone else, Texas has a lot of uninsured people and a lot of people beneath the poverty line. Fully 26.6 percent of Texas's kids, for instance, don't have health-care coverage. That's in part because Texas is pretty poor, with a lot of immigrants. But it's also in part because Texas has a very spare social safety net. Which makes it, in turn, easier for Texas to balance its budgets in recessions. A state like California sees its social services spending shoot up in a recession, because the programs are relatively generous and more people need them during an economic downturn. A state like Texas also sees a rise, but less so, because the programs are less generous and cover fewer people.

Is that the whole story behind Texas's balanced budget? Almost certainly not. But it's probably part of it. And it does point to the difficulties of naming a state where 24 percent of the residents are uninsured and 29 percent of the children live in poverty as a "model" for the nation. Compare that with Massachusetts, which is seeing more per-capita GDP growth and far fewer residents either in poverty or without health insurance, though it does have a slightly higher unemployment rate. It's not obvious to me that the archetypal red state bests the archetypal blue state in that comparison.

By Ezra Klein  |  August 3, 2009; 2:23 PM ET
Categories:  Economic Policy  
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Comments

Has Douthat written a half-decent column yet? Has Douthat written a column that can't be shredded by someone who has even a rudimentary knowledge of the subject yet? What is Douthat doing writing for the Times, anyhow?

Posted by: WarrenTerra | August 3, 2009 2:38 PM | Report abuse

Texas isn't all that red either. Obama got 45% of the vote, which is more than he got in most other "red" states. The major metro areas are decidedly blue, and over 1/3 of the Congressional delegation is Democratic. Texas is not just a bigger Idaho or Wyoming.

Posted by: tl_houston | August 3, 2009 2:57 PM | Report abuse

Reading Douthat makes me wistful for clanking prose and leaky arguments of Bill Kristol.

Posted by: slowpoke132 | August 3, 2009 3:24 PM | Report abuse

http://www.cdc.gov/nchs/data/nvsr/nvsr54/nvsr54_20.pdf
Divorse Rates: (2005)
TX - 6.4%
MA - 5.1%
TN - 9.0% (Highest)
WA - 5.0% (Lowest)

http://www.luminafoundation.org/research/state_data/texas.html

Education attainment rates in Texas (ages 25-34)
Assoc. Degree: 5.7%
Bachelor's Degree: 17.9%
Graduate Degree 5.7%

http://www.luminafoundation.org/research/state_data/massachusetts.html
Education attainment rates in Massachusetts (ages 25-34)
Assoc. Degree: 7.8%
Bachelor's Degree: 28.5%
Graduate Degree: 12.9%

Google offers to be Ross D's friend, but he prefers self-ignorance.

Posted by: JimPortlandOR | August 3, 2009 3:25 PM | Report abuse

A recent article by The Economist also noted that Texas spends very little on education and, therefore, has one of the highest high school drop out rates in the country.

Interestingly, it also noted that Texas will likely soon become a blue state because of the continuing migration of Hispanics, many of whom vote Democratic.

Posted by: sean_w | August 3, 2009 3:54 PM | Report abuse

Dallas (the only Texas city in the Case-Shiller 20 metropolitan area index), pretty much avoided the housing bubble. If the overall economy tracks the boom/bust of that market, then I'd guess that Texas has escaped much of that.

But, unlike many other states, Texas has a huge oil industry, and both the oil price peaks and the housing peaks were fairly concurrent, I would wager that the differences between the post-peak behavior of the two markets correlates fairly well with Texas vs. everyone else.

In short, I think they were riding out a different bubble, one that happened around the same time, but one that has played out differently.

This is just a quick speculation off the top of my head. There might be nothing to do it, or plenty to prove it wrong for all I know.

Posted by: nylund | August 3, 2009 3:56 PM | Report abuse

Pwned. You need to replace this chump.

Posted by: rcaditzpeck | August 3, 2009 3:57 PM | Report abuse

In addition to what Ezra and others have said, I'll just point out that Gross State Product growth figures aren't particularly meaningful unless they're adjusted for population growth, and population growth is greatly impacted by housing and energy costs and climate. That's not to say they're completely meaningless -- a state with a robust economy will usually attract more newcomers than a state with a moribund one. Still, one would generally rarely expect the GSP of, say, slow-growing (population-wise) Massachusetts to expand as fast as that of fast-growing Texas. What you really need to look at is per capita GSP, and as others have pointed out, Texas does not occupy a particularly lofty place on that score.

Posted by: Jasper99 | August 3, 2009 4:28 PM | Report abuse

There are too many variables differientiating the economic performances of states to suggest that whether they are red or blue is the determining factor. However, Douthat's underlying point, misdirected by his color comparison, is valid -- that to implement the programs the Democrats want to implement, without borrowing or printing more money and creating inflation, there needs to be economic growth with a solid foundation of production, low unemployment, and, thus, consumer confidence -- there needs to be wealth generation. The wealth generated in the 90s and the beginning of the 21st century proved mostly to be a bubble, so the question is what model do we use to create the type of real wealth necessary for government to pay for healthcare reform, cap and trade, two wars and the transformation of both the banking industry and the auto industry?

Posted by: mdfarmer | August 3, 2009 6:37 PM | Report abuse

Douthat has had a couple of OK ones, but this was far and away his worst. My own (from Texas) take, before seeing Ezra's:

http://socraticgadfly.blogspot.com/2009/08/douthat-gets-recession-all-wrong.html

Posted by: SocraticGadfly | August 3, 2009 8:55 PM | Report abuse

Texas is a close as the US comes to a third-world nation: a thin layer of the super-rich, a small middle class, masses of poor people without education or social services (most of them ethnically distinct from the dominant classes) desperate to work as servants and unskilled laborers, an economy based on agriculture and resource exploitation, and one-party government.

This is what the Republicans want for all of us.

Posted by: Bloix | August 3, 2009 9:34 PM | Report abuse

Ezra, we're also the state with the lowest percentage of people who qualify for unemployment benefits when they file.

Posted by: SocraticGadfly | August 3, 2009 9:37 PM | Report abuse

The state of Texas admitted it balanced its budget 97% by using the federal stimulus package, the highest rate in the nation. http://offthekuff.com/wp/?p=20325

While it is true there are pockets of almost normal economic growth in Texas in major urban areas for those who run into problems decades of sliced budgets in social services means almost no health options and low unemployment benefits and even these services almost impossible to get.

Posted by: gary_ | August 3, 2009 11:45 PM | Report abuse

"Fully 26.6 percent of Texas's kids, for instance, don't have health-care coverage"

I beg to differ. I would say that most of them are Mexico's kids residing illegally in Texas.

18% of those living in TX are there illegally.

Posted by: quoteme08043 | August 4, 2009 9:21 AM | Report abuse

Douthat's common sense points about Texas and California are obviously a huge threat to Klein, since he's devoted so much time to trying to debunk them (not so successfully).

Let's face it, Texas has huge numbers of illegal aliens in it, most of whom account for its unemployment and uninsured levels. It would be in even better shape than it is now if there were a barrier between it and Mexico. California spends money like drunk sailors on shore leave, and is NOBODY'S model for economic health, not matter how many charts and graphs Klein posts. Anybody with a lick of common sense (a class which I increasingly doubt includes Klein) would want to live in Texas, not California.

California does have better weather, though, I'll grant you that.

Posted by: WashingtonDame | August 4, 2009 9:40 AM | Report abuse

Simplistic. The number of illegal immigrants in Texas is staggering (about 100% higher than the average of the rest of the country), and even though that (admittedly, these are wikipedia numbers) represents an increase from about 3.5% of the population to 7%, second and third generation families have difficulty escaping the tendency to stay within their own communities (there was some article about two years back out of UCLA comparing hispanic trends from like thirty years ago and those of recent communities). At any rate, the culture established by the continuing stream of illegal workers definitely pushes down wages for everyone else [this is why I favor immigration reform]. Whether this is due to racism on one community or the other or both is, of course, a pretty important question, but just to sneer "Texas is poor" is not a particularly substantive arguement.

Texas is big, and very rural; a desert in a lot of its territory, really. The little rinky-dink towns out in the middle of the panhandle (except for a few people sucking at the government windmill teat) are necessarily going to be poorer than the nearly-all-urbanized northeast. (Which has had a big head start anyway; it *should* be ahead.)

Also, its notable that Klein does nothing to address the arguments concerning the actual businesses in Texas. And noone touches the fact that Texas cities are far, far better for the middle class than NYC, for instance:
http://www.city-journal.org/2008/18_3_houston.html

And as far as a lack of education goes, it has to be remembered that not everyone HAS to get an education to get a decent job here: the offshore drilling industry, ports, airports, interior drilling, other energy, farming, and various other industries do not require a liberal arts or business degree to start working.

Posted by: mortalkonlaw | August 4, 2009 9:43 AM | Report abuse

"Texas is a close as the US comes to a third-world nation: a thin layer of the super-rich, a small middle class, masses of poor people without education or social services (most of them ethnically distinct from the dominant classes) desperate to work as servants and unskilled laborers, an economy based on agriculture and resource exploitation, and one-party government."

Never been there, have you?

Posted by: tl_houston | August 4, 2009 11:48 AM | Report abuse

The bad news in Texas will just get worse if the state continues to underinvest in higher education and other catalysts for change. The Texas Medical Center is what it is because of federal research funding.

Posted by: wamintz | August 4, 2009 12:12 PM | Report abuse

Many comments cater to the notion illegal, undocumented immigrants account for the high rate of uninsured living in Texas.

On the other hand, officials from the Texas Hospital Association said, according to studies by the Texas Department of Insurers (TDI), there are two reasons why Texas has the highest # of uninsured, neither of which can be attributed to undocumented workers:

1) Large numbers of low wage workers cannot afford private health insurance; it is too expensive.

2) Most small businesses do not offer health benefits to their employees; it is too expensive.

The TDI study found less than 20% of the uninsured in Texas are undocumented immigrants.

Similarly national studies show 22% of the nation's uninsured are undocumented workers whereas 78% of the uninsured are American citizens.

To successfully reform the health care system necessitates using facts. So now that we know undocumented immigrants are not the reason Texas has the highest number of uninsured in the country, can we please, once-and-for-all, finally put that tedious argument to rest!


Posted by: serena1313 | August 5, 2009 12:02 AM | Report abuse

Let's look at the real color scheme here...

Californians are black and blue by an economy which has put them in the red. This is due to the blue bloods in the east spouting the philosophy of the reds encouraging the Californian social system.

The skies are blue for Texas because it is in the black because it governs as a state which is red.

Posted by: letmapeoplego | August 6, 2009 11:03 AM | Report abuse

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