Wednesday, June 21, 2017

BadPolitics: What we think moves the economy really doesn't.

I've got one more thing to say about the Chron's business columnist in regards to his column today, and then we'll mention him no more in the pages of this blog.

Indignation over economic conditions is righteous. Chris Tomlinson, ($$$)

Destroying economic blocs, canceling trade agreements, erecting border walls, sparking class wars and stoking tribalism will not improve the lives of Americans. Making imported goods more expensive, cutting exports, reducing immigration and waving the flag will not create jobs, improve our schools or make retirement more comfortable.
But neither will maintaining the status quo. Rather than ridicule the righteously indignant as ignorant or xenophobic, smart leaders must address their legitimate complaints about unresponsive government, worsening standards of living and an exploitative economic system. We need better schools, higher wages, affordable health care, campaign finance reform, more job training and greater opportunity for all.
Otherwise anger will rise, revolution will come, and the losses will be profound.

Of course, he writes all of this after ridiculing the righteously indignant and ignorant and xenophobic so there's that.

There's also the fact that none of his policy proposals is going to help.

The two states most often scrutinized in the Petri dish are Texas and California. For a few years, when oil and gas was booming, Texas had the marked advantage and the myth of the "Texas Miracle" was born. It allowed politicians of middling ability to rise to national prominence, made cultural rock stars out of middling-to-sub-par opinion writers and gave us Rick Perry, for better or worse depending on your view.

For years politicians would jump up and down and comment on "The Texas Way" and how we were successful not because some companies were finding new, inventive and relatively cheap ways to pull oil out of rock, but because politicians in Texas basically set back and let business work. It was Obama's "You didn't build that" from the "conservative" aisle.  And it was wrong.

Because now the world has more oil supply than demand and the oil business is struggling. On the flip-side California was struggling for years as their big industry (tech) struggled through a tough period of their own. California took the opposite tack and raised taxes on the middle class, basically taxing them out of the State.  Many went to Texas, and now find themselves unemployed.

What California did was maintain their upper class, who are largely employed in the tech industry and who are dragging the State along for the ride as innovation and sales are booming.  Suddenly it's the California politicians who are geniuses while the leadership in Texas is being painted with the moron brush.

Whatever your opinion of Dan "The Man who would be King" Patrick, the idea that his ham-fisted leadership in the Senate, his bathroom politics or his sanctuary cities bill has somehow led to the current financial downturn in the State is to give him too much credit.

There is no "correct" way to govern. From a pure policy perspective. The brilliant thing about America is that different states are allowed to govern in different ways and people can pick and choose where they wish to reside.  Granted, for many, the choices are somewhat limited (you don't see too many poor, minority people in the People's Republic of Vermont for example) but they are there.

Texas decided to offer a relatively light tax burden initially (something that has changed over time with the increases in fees and property taxes) which allowed for those in the lower-middle class to purchase things they liked, cars, homes, smart-phones, while California expanded the safety-net for the poor on the backs of the middle class, but left its influential upper-class relatively unscathed.

Despite what you might read, both States have a lot of poor people that reside within their borders. None of them, are doing "well" despite news that in California they are all getting a puppy and a BMW.

What we do know is how NOT to run a State. Example A is Illinois who is so broke they cannot pay attention right now.  In so-called "well-governed States such as California and Texas, the dire governance can be found at the municipal level (see Houston or Dallas as an example of this).

To my mind how each individual state sets their tax policy is somewhat irrelevant. What business wants is a clean, fair and simple regulatory system, and an easily implementable tax system that they can pass on to consumers. Outside of this they want the taxes on individuals to favor their chosen worker pool. This is the case in both California where highly skilled engineers do the heavy lifting and Texas where workers out in the field drive the economy.

Everything else is just whistling at a hurricane. Sure, the tune you are whistling might be the prettiest thing ever, but it's not going to make a dent in the power of the storm.  What California needs is for the tech industry to keep booming, what Texas needs is $60 oil. One of these is more likely to happen in the short term than the other. No government expenditure or restriction of rights is going to change this fact.

Campaign finance reform as an economic aid?