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Tuesday, April 21, 2009

Texas Secession

Tom Delay's bone-headed call for Texas to secede has sparked a broad online debate about the ramifications of secession for Texas, and weather Texas is truly "wealthy" as Perry claims. This prompted Matt to opine:

One problem here is that Texas isn’t a wealthy state. Its median household income of $47,548 made it 28th in the country. Below average, in other words. New Jersey is second, California is eighth, and New York is nineteenth. Indeed, of the top ten states in per capita income nine are “blue” states.

The exception is Alaska, whose wealthy is due not to “hard work” on the part of the population or a business-friendly policy environment but to the combination of substantial natural resource wealth and a small population. Texas is like a poor man’s Alaska, with the substantial natural resource wealth but with the wealth spread across a much greater population.

Ta Nehisi Coates picked this up (and despite my deep unabashed boy crush on each) I had to respond (a response TNC kindly reposted):

This is pretty ignorant. The GDP of Texas, in 2007, was 1.14 trillion dollars, close to nine percent of the national GDP (13.7 trillion). In this Texas stood just below California (1.8 trillion) and above New York (1.10 trillion). Taking the median income may say a lot about wealth distribution in Texas, but it’s a stupid measure of how “wealthy” the state is. Tell me again how Texas is a “poor man’s” Alaska (GDP 44 billion).

By the way — this means Texas’ economy would make it the fourteenth-largest in the world, larger than Australia, Ireland, Italy, etc.
Note: I think the secession talk is stupid grandstanding (albeit, grandstanding drilled into us by the mandatory Texas history course we public schoolers take). But it shouldn’t be dismissed as an operationally insignificant possibility.

The central question, as I understand it, is how wealthy the state is, not what is the centerpoint value of the wealth distribution. Using the median confuses wealth with income equality. California’s median income was $56,000 for 2006-7, Texas’s $45,000 for the same period. But if you divide GDP by population, California’s GDP per person was $49,000, Texas’ 48,000 (rounded up from 47,581). What this suggests is that the *wealth* on a population basis for Texas is roughly equivalent, but distributed much less broadly than in California. If we’re talking about just policy, then California looks a hell of a lot better. But in terms of whose policy is better at generating wealth, it’s six of one, half a dozen of the other. THAT’s why the “flaws” of median income make its use in this context misleading (if not ignorant).

There's been more discussion over at TNC's blog at The Atlantic, including some arguments that pick up Matt's assertion that Texas wealth doesn't count because it's oil based.

To me, this is a bit like arguing that Houston's transportation woes are due to the prevalence of horse-drawn buggies. Only a fraction of Texas' economy is Oil and gas based (despite stereotypes). This has a lot to do with the oil bust of the early 80s, which forced a large-scale diversification of the Texas economy.

To put this in numbers, according to the Texas Comptroller:
Assuming oil and natural gas prices of $30/bbl and $5/Mcf and 2002 annual production of 368 MMbbl and 5,038 Bcf, wellhead value is greater than $36 billion. Natural gas wellhead value is currently double that of Texas oil. In terms of economic value trickled down through the Texas economy and jobs created, this figure equates to over $105 billion and 691,993 jobs.

With the Texas gdp for that year 829 billion, that makes the value of Oil and Gas about 4% of state GDP, and about 13% once all associated economic activity is included (which would include everything from associated housing and food production to auto sales). And while I don't have the numbers, I'm pretty sure the state's production is continuing to decline, which means those percentages are probably significantly lower today. That's hefty, but it's absurd to attribute all of the income inequality in Texas, or all of its wealth, to its natural resources.

For all that, Texas secession is an absurd idea fueled by our mandatory Texas history courses (which remind us that it's a right guaranteed by our state constitution--civil war be damned!). That's why, when polled, 31% of Texans think we have the right to secede, and 25% either would like to or are undecided. But it's a bit like asking New Yorkers whether they've got the best pizza, or Bloomington residents who's got the best shot in the sweet 16 next year. It's a pre-programmed cultural more without larger significance. End of story.

Now git off my porch.

1 comment:

Juls said...

The cost of living is extremely less than that of Cali. The cost of living is also extremely less than NY... or New Jersey. Why don't you put that into your "facts" the next time you try to actually know it all. What a wonder that I'm the only one that commented on you post.