03 August 2009

Red vs. Blue Economies

Ezra Klein (him again) and Andrew Sullivan (yes, I am a fan) both have stories (here, here and here) today on Ross Douthat's column in the NYT, in which Douthat argues that red-state economic models (specifically Texas, where I currently reside) may be more useful for emulation than blue-state economic models (in particular California). As you might expect, that argument is somewhat against the weight of the evidence.

California is a mess, no question about that. The housing market and unemployment are quite bad and the recent budget cuts are going to be quite painful for many Californians.

It is also true that Texas has responded better than most to the current recession. Last time I checked, unemployment was lower than the national average. In my own experience, some people here have lost their jobs but the consumer and housing markets have remained relatively healthy in spite of all the bad news. However, there is a price to be paid in all this. In terms of a social safety net, Texas is a quite miserly. Its levels of poverty and lack of health insurance (both for the general population and specifically for children) are among the worst in the nation. (See Klein's chart here). Texas has some special challenges-- in particular the large immigrant population-- but of course that is shared by California as well. Texas also has natural resources and industries that contribute a goodly share of the state's tax base, but somehow it has been difficult to translate these revenues into benefits and services for the most disadvantaged. Part of it is a question of priorities-- while I noted yesterday that Americans are more individualistic than Europeans, Texans are the epitome of this attitude.

Getting away from these two states, the bottom line is the twenty-five most prosperous states (by average income) are overwhelmingly blue states (21-4 in favor). The least prosperous states...well why belabor the point? But all of this obscures the real issue. The health of a state's economy cannot be measured solely by its per capita output or income, or the average price of a home. There must be room for a metric which reflects how broadly the benefits of prosperity are shared. No doubt this may reorder the list somewhat, but we have to move away from the abstraction that it is the states that have $X in income and remember that the ones truly suffering are not states, but individuals, families, and children.

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