Free-Market Texas Continues to Kick Economic Ass
Texas is creating jobs and reducing unemployment faster than the nation as a whole, reports the Federal Reserve Bank of Dallas. The Lone Star State also outstrips the country in terms of exports. Could it be that this dynamic economy is the result of the state's healthy business environment and generally strong regard for economic freedom? If so, state officials better take care, because Texas has slid a bit in the rankings, and may risk losing its advantage.
In the latest monthly survey, the Dallas Fed reports that "employment rose at a 3.2 percent annualized pace in September, faster than the nation's 2.2 percent increase." Notably, the strongest job growth sector is private non-farm employment. That brings the unemployment rate down to 5.2 percent, lower than the national 5.9 percent jobless rate.
Separately, the Dallas Fed also reports that export growth from the state outstrips that in the United States as a whole.
If you're a believer that prosperity has a little something to do with leaving people the hell alone to make (and keep) their payday, it's no surprise that Texas gets kudos for generally restraining politicians' temptation to screw things up. Chief Executive magazine has ranked the state as having the strongest business environment in the country for ten years running. Texas rates a solid 10 out of 50 states in the Tax Foundation's ratings of business tax environments. In overall taxes, WalletHub ranks Texas as the 7th least burdensome. Canada's Fraser Institute puts the state in fourth place in terms of economic freedom among states and provinces in Canada and the United States—and second among U.S. states.
That's all good, and isn't just to state residents' credit, but their profit, too.
But there's a warning in there. In the Mercatus Center's combined rankings of social and economic freedom, Texas has dropped six places since 2009, to 14. "Like many southern states, Texas performs better on economic freedom than personal freedom," Mercatus notes, "Yet despite its reputation as a low-regulation state, it is only average for regulatory policy." The state also has a debt problem at the local level that may make low tax rates a challenge to maintain.
If politicians are going to be meh in terms of their respect for personal freedom, they really need to emphasize that commitment to not getting handsy with people's wallets.
The Fraser Institute also notes that the top-scorers in their ratings hold their place largely due to relative advantage—not because things are getting better. In fact, Canadian provinces, on average, are ranked better than their American counterparts, but only because "their economic freedom is declining more slowly than in the US states."
The signs aren't all ominous. Texas implemented strong eminent domain reform just three years ago. That's an indicator that state officials retain at least some respect for the conditions that keep the place from turning into West Bulgaria California.
If they want the prosperity to keep coming, they'll continue to stay out of the way of the people and businesses that create it.