Wednesday, July 15, 2009

America's Future: California v Texas

I love the Economist. It feels like it's more removed from the American culture wars of liberals vs. conservatives because it comes out of Britain. It is socially more liberal but pretty firmly economically conservative, which I love. In general, it's fresh and fantastic reporting.

I was fascinated to see this week's headline article titled "America's Future: California vs. Texas" which a picture of a sad looking potbellied surfer with a cracked surfboard labeled 'Golden State' looking enviously at a muscular cowboy running headlong towards the beach carrying a shiny Lone Star seado.

Texas is fascinating to me. Coming down here from Chicago was definite culture shock - I hadn't realized how dramatically different the culture of cosmopolitan, liberal Chicago would be from fiercely independent, mostly conservative and evangelical Texas. I view Texas with humor, mostly, because as a whole this place is so quirky, as the Economist editorial points out:

California and Texas, the nation’s two biggest states, are the twin poles of the West, but very different ones. For most of the 20th century the home of Silicon Valley and Hollywood has been the brainier, sexier, trendier of the two: its suburbs and freeways, its fads and foibles, its marvellous miscegenation have spread around the world. Texas, once a part of the Confederacy, has trailed behind: its cliché has been a conservative Christian in cowboy boots, much like a certain recent president. But twins can change places. Is that happening now?

Everyone knows California is in bad shape at the moment, but it is stunning to me to read how well Texas is doing, due in part to the small government model (and here all the Republican and Independents cheer). In contrast to California being ranked by Chief Executive magazine as the worst place to do business at the moment, Texas is the very best. We have lower recession rate than the national average and a very low rate of housing repossession compared to the rest of the country. We have NO capital gains tax and NO income tax (which completely shocked me when we first moved here and I tried to fill out my state taxes). In 2003 we eliminated our deficit - how often are states or countries totally without debt? Props to Texas. We even have a "savings" of some sort, called a "rainy day fund" taken from taxes on oil and gas companies and only accessible by a 2/3 vote from both houses of the state legislature. We are business friendly with our taxes, and therefore are home to more Fortune 500 companies than any other state. We have a fairly open policy towards immigration (at least officially - unofficially the picture may be different).

BUT... and there's always a but... we have a our problems. Education is a huge one - would you believe that the Dallas Independent School district passed legislation last year that will not allow teachers to fail students? Ridiculous. We only have ONE top 20 university in this massive state, and it is small and private. The state high school drop out rate is extremely high and the rate of spending per pupil is incredibly low. The biggest problem is among Hispanics - they have a high dropout rate and because of immigration and high population growth, within 10 years they will make up the majority of Texans. Without a reversal in the education level of Hispanics, the majority of the next generation of Texans will be very poorly educated.

Interestingly, despite Texas being a big red state known for being fiercely conservative, the Hispanic population is mostly Democrat and will soon be the majority. Unless there is a party shift among Hispanics or a shift in immigration levels, Texas will be a solidly Democratic, liberal-leaning state in just a few years. Unless there is an ideological change in the Democratic party (which isn't unprecedented), this means that Texas will actually follow the same path California has taken and move from being a big, wealthy, business-friendly state to a state burdened by bureaucratic spending and soon bankrupted by supporting the mostly under-educated population. The Economist describes this possibility:

Despite all this, it still seems too early to cede America’s future to the Lone Star state. To begin with, that lean Texan model has its own problems. It has not invested enough in education, and many experts rightly worry about a “lost generation” of mostly Hispanic Texans with insufficient skills for the demands of the knowledge economy. Now immigration is likely to reconvert Texas from Republican red to Democratic blue; Latinos may justly demand a bigger, more “Californian” state to educate them and provide them with decent health care. But Texas could then end up with the same over-empowered public-sector unions who have helped wreck government in California.

I would tentatively say that Texas needs to work on their education system, and fast. If they can boost education and direct the flow of educated graduates into jobs and innovative businesses, it's very likely that even a Hispanic-dominated population could remain fiscally conservative. The future of Texas is wide open - I'm fascinated by what could happen. As the Economist concludes:

The truth is that both states could learn from each other. Texas still lacks California’s great universities and lags in terms of culture. California could adopt not just Texas’s leaner state, but also its more bipartisan approach to politics and its more welcoming attitude towards Mexico. There is no perfect model of government: it is America’s genius to have 50 public-policy laboratories competing to find out what works best—just as it is the relentless competition of clever new firms from Portland to Pittsburgh that will pull the country out of its current gloom. But, to give Texas some credit and serve as a warning to Mr Schwarzenegger’s heir, at this moment America’s two most futuristic states look a lot more like equals than ever before.
View the Economist's "Special Report on Texas"

1 comment:

Karli said...

I listed to the Economist's podcast on this and immediatly thought of you. It was short, maybe 10 minutes, but it was really facinating, especially the information about immigration and education.