Texas vs. No-Growth Coasts

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Governments must rely upon profitable businesses. Without them, government has next to nothing.

And yet “next to nothing” is what governments can do to best help businesses succeed.

Thank Texas Governor Rick Perry for these thoughts . . . and Matthew Yglesias, who commented on Perry’s recent “nuclear-strength” video promotion, inviting businesses to leave places like New York and locate themselves in Texas, which has fewer regulations and no income tax. The ad claims Texas is “big for business.” Yglesias quibbles:

If New York was a terrible place to live, work, and do business, then it would be cheap to live in New York. But New York is not cheap. It’s not Detroit. It’s not even average. It’s, in fact, hellishly expensive. If New York emulated Texas and eliminated its income tax, rich people would bid up the finite supply of New York City land at an even more furious rate—the city wouldn’t see Houston or Dallas growth rates.

I’m no economist, but I have quibbles with Yglesias’s critique. New York is expensive, yes. But the cause of the expense isn’t just that people bid up housing and services. It’s expensive in no small part as a result of all those regulations, especially courtesy of one regulation in particular: rent control. Get rid of rent control and the city income tax? Watch housing grow.

And growth, Yglesias rightly points out, is what’s really in Texas’s favor. Texan low-impact government policies favor growth, while “the residents and politicians” of blue-state/beach-front states, though “liberal,” have, in fact, “become exceptionally small-c conservative and change averse.” Because they do too much, allegedly to “help.” But mostly to gentrify.

This is Common Sense. I’m Paul Jacob.

4 Comments so far ↓

  1. Jun
    20
    10:03
    AM
    Roger and Lynn Bloxham

    Texas is much better, where we now reside, than most states, but one has to be ever vigilant. Many who understand economic liberties quite well sadly have little grasp of individual liberties…for others.

  2. Jun
    20
    10:46
    AM
    drrik

    It will be a problem when the yankees who have thoroughly crapped all over their own back yards to the point where they are unliveable, move to Texas and begin doing the same thing there. All in the name of the benefit and welfare of humanity. Too bad that they can’t put restrictions on allowing lib-progs IN to Texas.

  3. Jun
    20
    12:42
    PM
    Rollin L

    Having lived in L.A. most of my life, which is not so far behind N.Y. City with respect to this discussion (and CA vs NY state), I came to the conclusion that the wealthy elites are not terribly fond of the middle class. They like the high regulatory/high tax model because it keeps the “riff raff” out. That is, people far enough up the economic scale to be out of the jobs and industries that service them, but well below their stratosphere. They are quite happy to see companies and jobs leave for Texas as it takes more people out that they have no use for. What they are too short sighted to understand is that the revenue lost to the state will eventually impact even them.

  4. Jun
    20
    5:14
    PM
    MingoV

    City income taxes and rent control have little to do with the high cost of living in NYC. The number one reason is scarcity of land: there literally is nowhere to build in Manhattan (unless Central Park gets overlaid by condos and malls). Worsening that situation are the restrictive zoning laws in all the boroughs that prohibit development. A third reason is the high cost of transporting goods. Tractor trailers cannot enter NYC and most of the surrounding areas. Freight trains aren’t allowed, either. All shipments must be transferred to smaller delivery trucks. The bridge tolls and heavy traffic increase delivery times and costs. A fourth reason is the high costs of installing and maintaining utilities such as electric, gas, water, sewer, and cable. A utility cannot just gouge a trench and lay a pipe or a line. The underbelly of NYC is a complex mess with the subways and tunnels competing with the utilities. Another factor is that public transportation charges do not cover costs, so everyone is taxed to pay the difference. Etc.

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