Lessons from Texas Economy

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med_Pamelas_Mug_copy55Despite some signs of growth in Oregon as well as a slight decrease in unemployment in the high desert region, one has to ask what could be done to show more significant gains in our economy. We turn our eyes to Long Horn country. What did Texas do that we might have done, if anything?

Federal Reserve Bank of Dallas recently found that more than one-third of all new jobs created in the United States since June 2009 have been located in the Lone Star state.

When Grill Gunny (political web blogger) asked Francis Little (a conservative Texan) why the Texas economy was doing so well, compared to many other states he said, “Great question. Easy answer. It is the difference between control by the politics or control by the people.”

In Bradford Plumer’s column in the New Republic, titled All Hat, No Cattle he reported: In a chat that dazzled The Wall Street Journal’s editorial board, Dallas Fed President Richard Fisher chalked Texas’s success up to its conservative policies (no income tax, lax regulations, tort reform), especially when compared with that deep-blue basket case, California.

Although Texas has not been immune to the challenges facing the rest of the country, its employment rate has remained relatively low, the housing market is surviving, energy resources continue to drive the economy and it has been creating jobs.

Here’s a list of some of the differences between Texas vs. Oregon:
Texas is a right-to-work state with very little union presence.
Texas has no state income tax and its overall taxes are low.
Texas has a low minimum wage (but it also has the highest percentage of minimum-wage workers in the country and its per-capita income sits below Californias).

Texas’s regulations are business-friendly. Texas is the only state that has refused the EPA’s requirement to establish a greenhouse-gas permitting program for big industrial plants. However the issue is now being litigated in federal court. The refusal is aimed at trying to help Texas’s massive hydrocarbon sector. And for good reason: Texas companies produce, refine and distribute more oil, natural gas, refined product and chemicals than any other state. But that production and refining means that Texas is the biggest carbon-dioxide emitter in the U.S., producing about ten percent of all CO2 in the country.

Texas unemployment rate is 8.2 percent—high, but still lower than many states including Oregon.

Texas is now the nation’s largest exporting state with products such as refined oil, machinery, vehicle, computer, civilian aircraft parts, voice, image and data transmission equipment, electronic processors and circuits. Texas exported $163 billion worth of goods around the world in 2009. That figure translates to 15.4 percent of total U.S. exports.

Daniel Gross, business columnist for Newsweek, explains the Texas housing market, “The mortgage delinquency rate (the portion of borrowers three months behind on payments) is 5.78 percent, compared with 8.78 nationwide, according to First American CoreLogic. Relaxed zoning codes and abundant land kept both price appreciation and speculation down. Texas also has state laws that prohibited consumers from using home-equity lines of credit to increase borrowing to more than 80 percent of the value of their homes. The upshot: Dallas housing prices have fallen only seven percent from their 2007 peak, according to the Case-Shiller index.”

However, it’s energy that is driving the Texas economy. Texas is so large that it still has massive potential for development and growth. Daniel Gross of Newsweek gives us this account of the Texas energy resources from oil and gas to wind.

”As it has for decades, energy is driving Texas’ economy. But it’s not because the state’s wells are gushing crude. In November 2009, Texas wells produced 1.08 million barrels per day, about half as much as they did in the late 1980s. In recent years, natural gas has been undergoing a renaissance. The state’s production rose about 35 percent between 2004 and 2008. And Texas has received a big boost from a different, renewable source of energy: wind. In this area, Texas’ size and history of independence has enabled it to jump-start a new industry. The state has its own electricity grid, which is not connected to neighboring states. That has allowed it to move swiftly and decisively in deregulating power markets, building new transmission lines and pursuing alternative sources.  The Texas’ grid already connects the plains of West Texas with consumers in Dallas, Austin, San Antonio and Houston. Texas recently surpassed 10,000 megawatts of capacity, the most by far of any state and enough to power three million homes. Wind energy is also powering employment—creating more than 10,000 jobs so far.”

There’s no doubt that Oregon has a tax as well as a business licensing and fee problem and it makes the state less business friendly than Texas. We have also seen our government over regulate several industries making it more costly to do business. In addition, Oregon has one of the highest minimum wage in the nation.

But Oregon is no Texas, and doesn’t want to be. We are a very unique state with no sales tax, numerous natural resources and innovative laws such as the bottle bill and air quality standards that keep this a very livable place.  If anything, one of our biggest challenges has been a non business friendly environment, which appears to be improving.

And in Central Oregon, we know for sure that when you come here for a visit you don’t want to leave. Not so sure you can say that about Texas. PHA

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