Rain, Rain, Go Away
If ever there were downpour conditions in the economy, it’s now: job losses, a soft housing market, a severe credit crunch. And yet Texas seems to be in far better shape than most every place else. How did we get here? Where do we go from here?
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Smith: James, you’re close to the governor and other top Republicans. Is Ernie right that there’s a failure of will among the state’s leaders to invest in the future?
Huffines: I take issue with that, because I think, to some degree, results speak for themselves. Texas is doing better [than the rest of the country]. There is always going to be a difference of opinion on where our priorities are. Senator Ellis and I both agree that we need more money for higher education, for grants and scholarships and financial aid, but I’m sure if you go back twenty or thirty years , when the Democrats held all the leadership positions, there were disagreements over how they wanted to allocate resources. Everything goes through cycles. And if you look around at other states where the leadership is controlled by the other party, they’re facing the same things we are.
Cortés: Let me be clear: I want to critique Republican and Democratic leadership. Ann Richards, who I loved and was a good friend, was way too timid, way too cautious, and unwilling to provide the kind of leadership we needed.
Huffines: The leadership in our state, whether Democrat or Republican, generally reflects the will of the majority. We have elections every two years for all House members and some senators, so ultimately the people of Texas have an opportunity to speak out on the direction they want our state to go.
Ellis: Professor, where do you see the Texas economy in twelve to eighteen months?
Weinstein: If I had to pick one place to ride out the great recession of 2008 to 2010, it would be here.
Ellis: I agree. We all agree.
Weinstein: Okay. Why? Because we’re coming off of this dynamic era of huge population and job growth that is helping to insulate us somewhat from the vicissitudes of the global economic downturn. That’s why we came into the recession eight months after the rest of the U.S. We had speed built up, and we had high energy prices. But let me give you a statistic. Right now our per capita income is about 6 percent below the national average. In our entire history our per capita income has only been above the U.S. average once, in 1982, when we were one percent above—but by ’86 and ’87 we were 11 percent below. In the last 25 years we’ve bounced between 10 percent below and 4 percent below. What does that tell us? It’s just one statistic, but maybe what it’s telling us is that the two thirds of our state that’s low income is growing faster than the third that’s high income. Maybe what it’s telling us is that, by this particular measure, we’re a below-average state.
Huffines: It could have something to do with the age of our population. We’ve got a younger state.
Weinstein: That’s true. We also know this is going to become a majority-minority state. That’s not going to change. We also know that a lot fewer Yankees are going to be moving here. Yeah, maybe we’ll get some companies from California, but if you just look at the population distribution, we’re not going to have as many folks moving to Texas. So you get back to “Okay, now that we know what the demographics in the state are going to look like, are we going to have a productive workforce? Are we going to have a productive workforce when we’re forty-first in the country in spending on public education?”
Cortés: Here’s the question I want to ask you: Given the fact that we have some difficult decisions ahead, is the state’s leadership thinking hard about the strategic decisions we’ve got to make now to deal with those realities?
Weinstein: My personal opinion is no.
Ellis: The leadership is thinking about how to stay in the lead.
Huffines: Hasn’t it always been that way, Senator?
Cortés: No. The guy who came up with the Marshall Plan was Will Clayton, who spent his last years in Texas. He was a cotton merchant, as I understand it, and he was no flaming liberal. But he figured out it was in our economic and political interest to make a huge investment.
Huffines: Well, I just have to argue with you a little bit. If you go back fifteen years, the state of Texas wasn’t even one of the top five states in terms of the numbers of headquarters of Fortune 500 companies. It’s not all about headquarters, but Texas leads the country today. Businesses want to come here, and businesses create jobs. I think it’s important that we have a business-friendly state. That doesn’t mean we have to compromise the safety net or anything else, but one solution to helping all aspects of the population is having an available, plentiful supply of jobs. And education will help, whether it’s pre-K or elementary or secondary or community college or higher ed. If we do the right thing on education, we’re going to have plenty of jobs.
Cortés: My understanding is businesses locate because of their supply networks, their communities they want to spend time with, the markets they can access.
Weinstein: There’s no question that we have great location—just look at a map. But we do a lot of silly things. The New York Times loves to make fun of Texas. The New York Times hates Texas, and anytime they can pick on us, they do. If it’s Governor Perry talking about seceding, it makes the New York Times. If it’s the battle over creationism in the science curriculum, it makes the New York Times. If it’s the Legislature saying, “We don’t want to spend any money on embryonic stem cell research,” it gets picked up in the New York Times.
Smith: I want the comptroller to respond to that.
Combs: I lived in New York for about ten years, and I remember an incredible insularity and provincialism there—somebody was really angry that I did not know where Abercrombie & Fitch was. There is a vast [misconception] that everybody in Texas has a room-temperature IQ.
Weinstein: That’s not the point I was trying to make, Susan. When the New York Times writes an article about creationism or intelligent design, it projects an image of Texas as a backwater. The same with the stem cell thing. I talked to the bioscientists, and they told me, “Researchers don’t want to come here because they’re afraid of what the Legislature might do to them.” Why would you want to come to a state that was not perceived to be a safe haven?
Ellis: It’s a real challenge for us when a fringe element, whether on the left or the right, holds good people hostage. Our future in Texas is going to be tied to being a part of the rest of this country.
Huffines: If you read The Big Rich, you see that they picked on Texas in the thirties, forties, fifties, sixties, and seventies. Unfortunately it’s something our state has had to live with. I don’t think it’s new.
Combs: Every state has an image that’s fostered someplace else, so there are people who do not ever want to go to California. There are people who do not want to go to Mississippi. There are people who do not want to come to Texas. I would say, however, that Texas is remarkably diverse in opinion—and it’s actually pretty doggone healthy to have that kind of debate. I believe we’re waking up to the fact that it’s absolutely imperative we nurture, protect, educate, and train our children. What I would call marginal issues do not obviate the fact that this is a very dynamic state with interesting opportunities and enormous value.
Cortés: My concern is that we think we debate a lot of ideas, but we dismiss so many things out of hand as not worth considering. Everybody knows we need a strong and healthy and innovative and creative business climate—that battle is won. We know we need leaders who don’t operate like bureaucrats. But that doesn’t mean we can’t begin to think hard about how we create the kind of infrastructure, both civic and governmental, necessary to sustain the kinds of markets we want. Markets don’t come from the sky. They’re not created by God. They’re human institutions. They require certain infrastructure—I learned that in Economics 101. You don’t create markets without confidence and trust. You don’t have confidence and trust without rule of law or respect for private property. And you don’t have private property without a public sector to protect it.
Combs: Ernie makes really good points, but it all comes down to one thing: The legislative process is fatally flawed in that everything has a two-year horizon. We have so few opportunities to take the long view. We come in for 140 days and try to carve our way through the morass of problems we’ve all described—I think it’s insane. Folks like Ernie and Bernard are trained to look back twenty years, while most of us have a two-to-four-year [window].
Ellis: The only way to change it, obviously, would be to amend the constitution. Voters would have to do it, and that’s unlikely to happen. In the system that we have, it’s very much leadership driven. So it matters who the House picks to be their Speaker. It matters who the voters pick to be the lieutenant governor. It matters who the lieutenant governor and the Speaker put on the Legislative Budget Board, because they’re moving the money around when we’re gone. Elections matter.
Huffines: That’s what I said earlier. Elections do matter.
Ellis: So you say, “How has Texas made it?” As opposed to the kind of beat-my-chest, Texas-proud answer, we’ve been pretty damn lucky. And I hope that lucky charm keeps rolling along.
Combs: I’ve got the other answer, Rodney. We have the best-shaped state in the country!
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