Monday, August 15, 2011

Where's the Big Picture?

I pay special attention to what Paul Krugman says because he’s one of the ablest and most influential liberal polemicists out there. So the quality of his commentary tells you something about the intellectual condition of modern liberalism. When Krugman's stretching a point it's probably because he's traversing ground that's inhospitable to liberalism as such.

Consider, in that light, what Krugman has to say about the so-called “Texas Miracle.” Rick Perry officially entered the presidential sweepstakes Saturday. By all accounts, his strongest pitch for the presidency is that he’s presided over the state economy that has created something like 40% of the country’s new jobs over the last two years. When it comes to debunking Republican talking points, nobody’s quicker on the draw than Krugman. True to form, he already has a column out today purporting to expose Perry’s job-creation record as something between an overstatement and a sham.  His main thesis is that, when you hold everything else equal and focus just on the job-creation numbers, you’ll see that the so-called “Texas Miracle” isn’t everything it’s cracked up to be.:
“So where does the notion of a Texas miracle come from? Mainly from widespread misunderstanding of the economic effects of population growth.

“For this much is true about Texas: It has, for many decades, had much faster population growth than the rest of America — about twice as fast since 1990. Several factors underlie this rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states, who are attracted to Texas by its warm weather and low cost of living, low housing costs in particular.

“But what does population growth have to do with job growth?”
Let’s stipulate that Krugman is making a couple of economically valid points. First, if you control for population change, Texas’ record of job-creation under Perry isn’t nearly as exceptional as people are making it sound. The fact that Texas still has an unemployment rate that’s a little higher than New York and substantially higher than Massachusetts shows that, like the rest of the country, Texas hasn’t been creating enough jobs relative to its population.

Second, even if Perry’s approach to public policy created above-average job growth in Texas, it doesn’t follow that its nation-wide application would make for more jobs nationally. Texas has been creating jobs at other states’ expense by winning a race to the bottom by levying lower taxes and providing fewer social services. That means, moreover, that the creation of low-paying of jobs in Texas doesn’t automatically translate into the greater well-being of Texans relative to the well-being of denizens of other states.

Fair enough.   The trouble, however, is that Krugman's insisting on holding all other things equal when it's pretty obvious that they aren't.  Take a step back and consider the improbability of what Krugman’s saying: Texas’ impressive-looking record of job creation doesn’t really argue for the superiority of its political economy over other states because increasing numbers of people want to live, raise families and do business in Texas while increasing numbers are voting with their feet against the political economy of places like New York and Massachusetts.

Do you really think that a high birth rate and inward migration has nothing to do with a widespread perception that Texas offers more and better opportunities than other jurisdictions?  Why do we refer to people as “human capital”? And do you really think that the availability of human capital in a jurisdiction has more to due with its warm weather than how it’s governed? At a time when every politician worth his salt is pivoting to the issue of job-creation try naming a single liberal Democratic governor with a job-creation record that a self-respecting conservative polemicist would even bother to debunk.

Today’s big-picture political issue is whether a political economy with a robust social safety net is a viable mode of social organization. Conservative Republicans, and not just Tea Partiers, speak of virtually nothing else. If you ask me, Rick Perry's Texas has its share of unattractive features.  But it presents a picture that people can contemplate that includes a relatively robust jobs market and a balanced budget, albeit with a relatively meager social safety net.  When was the last time you saw an influential liberal like Krugman trying to connect enough dots to draw a big picture of his own? 

2 comments:

Anonymous said...

I'd love to hear Krugman give us an economics lesson on how a president does help to promote a jobs creation environment. If that lesson does not include low taxes,tort reforms, and less regulation on business I'd be surprised. Does Krugman really think that government spending and green energy is going to create jobs? If so, he and Obama ought to get together and dream.

Anonymous said...

How can Krugman hold everything else constant? What sense does that make?

Krugman is a dishonest economist. By writing columns like these, I now take nothing he says seriously.