Over the last decade, Texas has been (along with Florida) one of the two leading states in attracting migrants from elsewhere in the country. It has also had an unusually large influx of immigrants from abroad. Both groups have greatly contributed to the states’ impressive economic growth. Washington Post analyst David Byler has a good article summarizing the key reasons why Texas has been such a magnet for people voting with their feet:
The Texas growth machine has a few key components, each of which help the state economy expand.
There’s the obvious: oil. Every good economy needs something of value to trade — and Texas has more oil than any other state….
But the Texas miracle isn’t grounded only in oil, trade and transportation. The state has no individual income tax, has cultivated business-friendly policies and the overall tax burden on business is low. Just as important, land use laws are lax — businesses can site and build facilities quickly and developers can easily place big, cheap homes on tracts of empty land.
And, as the cities have grown, new industries have gained strength….
Pia Orrenius of the Federal Reserve Bank of Dallas said, “We were basically oil, cotton and cattle in the 1980s, or I would say as far back as the 70s. We went, in 20 years, from oil, cotton and cattle to having a sizable high tech industry, a sizable telecom industry, a sizable manufacturing industry, a downstream energy industry. We’ve been able to diversify into a very broad range of industries. As these industries grow, we grow with them….”
As a result, Texas has become a magnet for migrants from inside America. The Lone Star State nets 100,000 people from other states almost every year.
Many are moving from big, blue states where homes are more expensive and taxes are higher.
As Byler points out, the oil industry alone, while significant, cannot explain Texas’ success. Relatively low levels of taxes, regulation, and land-use restrictions have also been crucial. The comparatively low levels of zoning restrictions on housing construction are especially crucial. In many other states, exclusionary zoning is one of the main factors preventing people from migrating to places with greater job opportunities. Byler rightly emphasizes that low levels of taxation, regulation, and housing costs has enabled Texas to expand a variety of industries, leading to a gradual decline in the relative significance of oil, over time.
The Washington Post isn’t generally known for its love of Texas’ GOP-dominated state government. But in this case, they have captured the sources of its success well.
Texas’ policies are by no means perfect. The state is no libertarian utopia (or any kind of utopia). But its relative success has important lessons for both major political parties.
Democrats, obviously, can learn from the value of low taxes, regulation, and land-use restrictions. These are among the key reasons why Texas offers greater opportunity for the poor and lower-middle class than many blue states do.
For their part, in the Trump era, many national Republicans have turned away from supporting a relatively free market in housing construction, and instead embraced NIMBYism—exactly the opposite of the approach that has worked for Texas. While the GOP may still support keeping taxes low, they have forgotten the fact that Texas’ low taxation is in large part made possible by relatively low spending. Under Trump, the GOP ceased to even pretend to care about restraining spending, even though spending restraint the key factor in limiting taxation on the long run.
It is also ironic that Republicans cheer Texas’ success in attracting migrants from blue states, but seek to severely restrict the entry of immigrants from abroad, even though the latter are in large part attracted by the same differences in economic freedom as the former. Both internal migrants and international ones also make major contributions to economic growth in their new homes. Many conservative Republicans readily grasp this effect in the case of the former, but tend to ignore it when comes to the latter.
Many liberal democrats have the opposite bias. They welcome international migrants seeking freedom in the US and applaud their contributions to our economy. But they view internal foot voting with suspicion, and often oppose the kinds of policies that make states attractive to internal migrants (and, often, international migrants, as well). Texas’ success should lead both parties to reconsider some of their positions.
To say that Texas has many good policies is not to applaud everything the state’s government does. In recent years, many of its interventions in national politics have been problematic, at best. To take the most striking example, Texas Republicans led what Walter Olson of the Cato Institute called the “Texas Turkey” lawsuit, which advanced ridiculously specious rationales for overturning the results of the 2020 presidential election (the suit was unanimously rejected by the Supreme Court).
But, whatever else can be said of Texas’ state government, they have gotten some important things right. The rest of the nation should learn from that.
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