Don't Mess With Texas: Why Democrats Should Embrace, Not Doubt, Texas' Economic Success

Lately, there has been a lot of debate about whether or not Texas has performed an economic miracle in increasing jobs during a recession. The popular view on the Right -- especially among supporters of Texas governor Rick Perry -- is that Texas' pro-business environment has boosted employment. The popular view on the Left is that the job growth in Texas is the result of low-paying, low-skill jobs that are no real economic boon at all. According to Matthias Shapiro over at "Political Math," the jobs data suggests that there has been significant job growth in Texas, that the jobs are not unusually low-paying, and that they are not concentrated in the energy sector. As Nate Silver is inclined to agree with Shapiro's view of the numbers, I am inclined to go along as well: So far as I can tell, Texas seems to be enjoying some economic success that is worth further study.

But here's a thought that my friends on the Left might consider before they try to mess with Texas: Texas's economic success might be doomed by policies popular among Republicans -- especially the Republican Right.

Why? Because Texas' success might be attributable to two libertarian policies that Republicans generally seem to resist -- (a) housing markets relatively unregulated by zoning and (b) lots of foreign (mostly Mexican) immigration. Both of these policies may have been major contributors to Texas' economic success. And both are policies that Republicans ranging from Chris Christie to Rick Perry himself are strenuously fighting. So, rather than fighting the story of Texas' success, Democrats might be well-advised to co-opt it.

First, consider the role of immigration in Texas' job success. Texas has a lot of undocumented workers, clustered in low-wage jobs. But (if Shapiro is correct in his view of the numbers) Texas' overall job growth does not appear to be especially concentrated in low-wage jobs. While low-wage immigrants may reduce wages of low-skill native workers, they may increase the wages of high-skill complementary workers.

In short, Texas' lesson for the rest of the nation is that we should attract more immigrants, not chase them out of the country. This is not, however, a message that Republicans want to press lately: It is a Democratic message. As Matt Yglesias has argued, Democrats should not run away from Texas' economic success with immigration but embrace it, wielding the "Texas miracle" to debunk the notion that an influx of immigrants is somehow responsible for high unemployment.

Second, consider the role of Texas' libertarian zoning in helping Texas to avoid the subprime mortgage crisis. It is a familiar point that zoning can increase housing prices by reducing housing supply. It is a less familiar but equally widely accepted point that these sorts of artificial increases in housing prices lead to housing volatility and help fuel housing bubbles. Indeed, the role of exclusionary zoning in contributing to the subprime crisis is one of the few points on which Paul Krugman and the Cato Institute agree. Texas is famous for its relatively unzoned housing market. Aside from containing Houston, the only major U.S. city that still lacks a zoning ordinance, Texas also makes it easy for developers to build out in the 'burbs with municipal utility districts ("MUDs") and generally lax zoning restrictions. Texas has also been relatively less affected by the subprime crisis than more heavily regulated housing markets. in short, Texas' distinctively lax attitude towards zoning might be responsible for Texas' weathering the housing bust relatively well.

Republicans, however, have a love affair with exclusionary zoning. Take the case of Chris Christie, governor of New Jersey, who has been making war on the Mount Laurel doctrine and calling for suburban municipalities in New Jersey to have near-total autonomy to zone out affordable housing like townhouses and apartments. These sorts of regulatory policies appeal to Republicans' home-owning suburban base, but they directly undermine the basis for the success of states like Texas. Again, it has been the Democrats in Trenton who have fought a stubborn rearguard action to stop Christie from allowing New Jersey suburbs to wall out low-income households.

In short, there may be lessons for the rest of America in Texas' economic success, But they are not especially Republican lessons. They are lessons, instead, in the importance of protecting equal access to housing by tearing down restrictive zoning policies and welcoming more immigration. There was a time -- it seems like eons ago -- when Republicans like Jack Kemp embraced these sorts of policies, but those days are long gone. Maybe Democrats should take up the libertarian banner and become champions of the Lone Star State.

UPDATE: So, based on Erik's comment below about the disparity between Shapiro's and Jared Bernstein's figures on Texas government employment, I tried to figure out the actual BLS figure. The BLS website gave me this table on government employment in Texas between 2001 and 2011, showing that total government employment in Texas was December of 2007 was 1,756,100 and 1,868,100 in June of 2011 (although that last figure is labeled "preliminary").
(Download BLS data on Texas govt employees). That's a difference of 112,400, which seems closer to Bernstein's figure than Shapiro's figure but is different from both of their numbers. Can someone reveal the actual BLS number?