August 16 2011
Messing With Texas: What The Administration Doesn't Know About Job Creation
New York Times columnist Paul Krugman says that "the Texas miracle is a myth." He argues that Governor Rick Perry's state is prospering because of high oil prices and population growth, much of this growth from Mexican immigrants and retirees.
As for the oil prices, does anybody think that, if Barack Obama were governor of Texas, he wouldn't have messed with the Texas oil industry by now? And those retirees: Wonder if they might be attracted to the Lone Star state because there is no state income tax?
Whoever the GOP nominee is, whether Perry or somebody else, his (or her) economic program is going to be pro-market along the lines Perry has followed in Texas. But because Perry is governor of a state that has created 37 percent of the new jobs since the recession officially ended, he currently is taking the heat.
Much of the criticism aimed at Perry's claim to have created jobs in Texas comes from the Obama administration and is derived from that administration's tragically misguided beliefs about how jobs get born. Perry knows that jobs are created by the private sector, not the government, while the anti-business Obama administration believes government stimulus is what puts people to work.
If government gets out of the way, as Rick Perry did in Texas, the private economy will grow; if the government injects itself into the economy with new regulations, drilling moratoria, and unstimulating stimulus spending, as the Obama administration has done, then job creation is likely to slow.
A good editorial in the Chicago Tribune takes a realistic look at Perry's economic record and finds "no miracle, but solid achievements." He is not King Midas, but he has had the sense to let jobs happen.
The most damaging criticism of Perry's record is likely to be that many jobs in Texas are minimum wage jobs. Alana Goodman of Commentary addressed this issue yesterday: She argues this is not the case just for Texas, noting that 73 per cent of the job-creation nationally has been in low-paying fields.
It is an unfortunate fact that higher minimum wages often mean higher unemployment. Another fact is that when companies are forced to pay a higher minimum wage, they demand more of an employee, ruling out many who might otherwise be able to hold down a full-time job. Oh, and here's another thing about the minimum wage: a job, even one that doesn't pay as much as we might want, is a stepping stone to a better job.
No, the Texas miracle is not a miracle--it is good, sound economic behavior of the sort that made this country great.