Thursday, February 10, 2011

A tale of two states

The plundering continues...

While many states have been struggling through the economic downturn, there's been a giant neon sign hanging over Texas that says "OPEN FOR BUSINESS."

In 2008, 70 percent of all the jobs in the country were created in Texas. In 2009, all of America's top five job-creating cities were in Texas.

More recently, "Texas created 129,000 new jobs in the last year -- over one-half of all the new jobs in the U.S. In contrast, California lost 112,000 jobs during the same period," according to "Texas vs. California: Economic growth prospects for the 21st Century," a new report by the Texas Public Policy Foundation released in October.

Texas is home to 64 Fortune 500 companies -- more than any other state in the union. (California has 51 and New York has 56.) For five years in a row, Texas has topped Chief Executive magazine's poll of the best state to do business.

Meanwhile, California is ranked dead last in the Chief Executive's survey. California state treasurer Bill Lockyer even went so far as to pen a Dec. 20 op-ed in the Los Angeles Times denying "the claim that we have a hostile business climate."

So why are businesses flocking to Texas and fleeing California? Well, as a recent headline from The Economist put it, in California "They paved paradise and put up the parking taxes."

Linked article points out that there is no personal income tax in Texas among other advantages that are attracting businesses and jobs to Texas.

Additionally, we would like to point out that the Texas legislature meets for 140 days... every other year. We believe there is something to be said for limiting lawmakers potential for legislative shenanigans and definetely something to be said for busting back California's lawmakers to that of a part-time gig.

But, really... how bad can it be here?

From Forbes:

Arnold Schwarzenegger was sworn in as the governor of California at the end of 2003 amid a wave of optimism that his independent thinking and fresh ideas would revive a state stumbling after the recall of Gov. Gray Davis.

The good vibes are a distant memory: The Governator exited office last month with the state facing a crippling checklist of problems including massive budget deficits, high unemployment, plunging home prices, rampant crime and sky-high taxes. Schwarzenegger's approval ratings hit 22% last year, a record low for any sitting California governor.

California's troubles helped it land eight of the 20 spots on our annual list of America's Most Miserable Cities, with Stockton ranking first for the second time in three years.

Hard-hit Central Valley towns, Merced and Modesto and even the state capitol, Sacramento make the list.

It was Oliver Wendell Holmes who said, “I like paying taxes. With them I buy civilization.” Unfortunately, with a bloated, inefficient, hyper-active and oft-times corrupt layering of governance that appears more concerned with cronyism and subsidizing a permanent underclass than performing basic services, that is no longer the case.


steve said...

From the Economist.

Garrett from the DMN on Texas sized debt.

If you really want to have fun, check out this interview with Bill Black and note the role Texas played in creating the S&L crisis.

While Texas revenue from oil wells is down, they still have a lot of refineries, which makes them a bit more resistant to recessions. Even more importantly, they did not take as big a hit in this recession because they very tightly regulated, yes regulated, second mortgages. Link for that available upon request.

Texas does make for an interesting economic laboratory. I almost moved there after leaving the service. No state tax was appealing and they pay docs much better than out east. The part I cannot figure out is why they have not done better. Few regs, few taxes, commodities to help get things off the ground and recession proof, mostly, industry (plus cheap labor and when I lived there for a short while no one seemed to care if it was legal or not). Why haven't they long ago surpassed everyone?


Dean said...

California has oil, also.

K T Cat said...

It's high time those little Delta Smelt got jobs!