Economics 101: When government is friendly to business, business gets done and jobs are created

From, believe it or not, The Washington Post:

Texas isn’t just leading the nation in job growth — it’s doing it more equitably, too
By NIRAJ CHOKSHI |

Underestimate Texas at your own peril.

You might be inclined to think that the Lone Star state is bad at creating good jobs. It is, after all, second only to Idaho in the proportion of its population earning the federal minimum wage or less, according to the Labor Department. And it has the ninth-highest Gini coefficient, a measure of income inequality. So it’s only natural to assume that the state is bad at adding good jobs, right? Wrong.

Texas experienced stronger job growth than the rest of the nation from 2000 to 2013, according to the Federal Reserve Bank of Dallas. Not only that, a pair of researchers note in a Thursday research publication, but Texas leads the nation in creation of jobs at all pay levels, too.

“Texas has also created more ‘good’ than ‘bad’ jobs,” they write. “Jobs in the top half of the wage distribution experienced disproportionate growth. The two upper wage quartiles were responsible for 55 percent of net new jobs. A similar pie chart cannot be made for the rest of the U.S., which lost jobs in the lower-middle quartile over the period.”

We’ve written plenty about how the income gap has continued to grow in recent years and decades, and the same is true with jobs. Nationally, all the jobs created since 2000 were concentrated at the highest- or lowest-paying quartiles. In Texas, however, job creation was more broad-based.

More at the link.

Governor Rick Perry (R-TX) wowed ‘em at the Conservative Political Action Conference this past week, and the Post article is evidence that the economic polices of the state of Texas are working a heck of a lot better than those of President Obama on the national level.

As our long-term readers are aware, your editor endorsed Governor Perry for the Republican Presidential nomination early on in the process. I still believe that Governor Perry is just the kind of man we need for President: a strong conservative with real executive experience, leading a state which has led the nation in job creation for several years.

Unfortunately, while Mr Perry might make a good President, it became apparent that he didn’t make a good presidential candidate: he flubbed up in several debates, and even though his debate performances got much better toward the end, the damage had been done. If President Obama has proved one thing, it’s that the qualities which make a great presidential candidate are completely divorced from those which make a good president. President Obama has been probably the best presidential candidate in my lifetime — he not only defeated the inevitable Hillary Clinton in the 2008 primaries, but won re-election despite very high unemployment and trillion-dollar deficits — and, at the same time, the worst president in my lifetime . . . and my lifetime includes Lyndon Johnson, Richard Nixon and Jimmy Carter! And Governor Perry proved that being a good governor does not make a person a good candidate.1

Simply put, job performance does not equal electability in the United States, and it seems highly unlikely that Governor Perry will be our next president, even though it is thought that he intends to run.

But the numbers are proving what sensible people have known all along: that Texas is doing a lot better economically than the rest of the country, and the conservative business and economic policies of the state — low taxes and a state government which is friendly rather than hostile toward business success — are at least part of the story.

  1. It should be noted her that Mr Perry didn’t win a gubernatorial campaign to become governor; he was the elected Lieutenant Governor when George W Bush resigned after winning the presidency in 2000. Mr Perry won subsequent gubernatorial elections in 2002, 2006 and 2010, but he was running as the incumbent. He has decided not to seek re-election this year.

22 Comments

  1. Nice article. Now we need a Business Friendly, Knowledgeable, Savvy, Smart president, cabinet, and staff and we can get somewhere. As long as we have this anti-capitalist marxist, liberal, progressive know nothing, we’re going down the sewer as he has designed.

  2. Then I suppose when government is not friendly to business or in the case of the collectivist Obama cum comrade Perry type government actually hostile toward business this happens:

    The news was not so mouth-watering for pizza fans Monday, as the Sbarro pizza chain filed for bankruptcy court protection. The move comes less than three weeks after it was forced to close more than 40 percent of its restaurants across the United States.

    Sbarro is best known for locations in malls, airports, train stations and highway rest stops.
    It’s actually the second bankruptcy filing in less than three years by Sbarro, whose previous action was in April 2011.*

    According to CNNMoney, the company announced in February it was closing 155 company-owned restaurants in the U.S., effective immediately. That left it with 220 U.S. locations and more than 600 other locations owned by franchise operators in 40 different countries.

    The closings left the company with some 2,700 employees.

    This latest closing announcement was one of many mass store closing announcements so far in 2014.

    Just this month, Radio Shack announced plans to shut up to 1,100 stores, and office-supply giant Staples said it would close 225 locations.

    Department-store chain J.C. Penney announced in January it would close 33 stores, while Macy’s said it would shut five stores and lay off 2,500 employees in a cost-cutting effort.

    Read more at http://www.wnd.com/2014/03/pizza-chain-sbarro-files-for-bankruptcy/#FxB7kxVz4eovMO8R.99

    Then on a variation on a theme by Obama ( and the entire last fifty years of collectivist/fascist drivel) let’s consider our manufacturing situation. Leftist love to state as a matter of fact and record that we “shipped our manufacturing over seas”. (Like such a thing is even possible ). We didn’t “ship” it over there; taxation and regulation created a hostile atmosphere for it here. When the political ruling elite picks winners and losers, the supply/demand relationship is distorted, resulting in misallocation of capital. When the toxic influence of government interference is removed, capital will again flow to where it’s most productive, and growth will resume. As always, the problem is leftists thinking they’re economists.

    Now once you throw the negative impact of unions into the equation, you can see why manufacturing is deemed unprofitable in the U.S. Unions distort the value of wage and they form a monopoly on labor which would never be tolerated among business.

    Then the idiot leftists in government, in the name of “income equality” institute the highest corporate taxes and most complicated and expensive taxation system in the western world. Couple that with the most government regulations of any industrialized nation, a litigious legal system rife with frivolous lawsuits and well, you see where this is leading. So much for the myth that the government made it easier to do business overseas, they deliberately and with malice, as part of a collectivist plan, made it harder to stay here.

    * I have always believed since it’s inception that the Sbarro business plan contained a fatal flaw. They locate their stores in medium to high end malls, airports, sports venues, museums, etc.. These locations normally cost five to ten times the rent of stores with similar square footage in less controlled areas. As a restaurateur, I can assure you food service cannot support the rents Sbarro incurred. Oddly, they seeked out those locations falsely believing the added foot traffic would make up for allowing their landlord to be their partner. Oops!

  3. I may not have been clear on the Sbarro business plan thing above. In the food/bar business your rent/mortgage should be around 10% of your gross. Under no circumstances should it exceed 17%. To simplify, if you have a 1000 SF store and your rent is $12 a SF then your rent will be $1000 per month. You would need to generate at least $10,000 per month gross income to control your rent expense. Now let’s say I’m Sbarro and I want a store in the King of Prussia Mall. At that location my rent for a 1000 SF would be about $60 sf so the same store would need to generate a monthly gross of $50,000. But wait, there’s more. In the Sbarro venues such as the illustrated mall, the landlord also gets a percent of your GROSS business over and above a certain pre determined amount. That percent is usually about 6%. And the level of gross it kicks in at is determined by both parties at lease signing.

    The above partially illustrates why after careful consideration of Sbarro style venues I decided to go more traditional like strip or shopping centers with much lower rents and pump more into advertising, décor, food quality etc. If I were ever to exceed 10-12% for rent expense it was because I bought the property and I was my own landlord.

  4. In the 1950′s, Bethlehem Steel had the world’s largest tidewater steel making and ship building/repair facility just SE of Baltimore at Sparrows Point. It employed over 35,000 people. My father was one of them. Today, it produces dust and scavengers. Also, there were a number of other businesses either servicing or using Beth Steel products just outsite the “gate” such as a can manufacturing plant. They’re producing dust and scavengers too.

    However, there is a relatively unknown historical site that helped save the country on Sept 12, 1814 when General Ross of the Brit Army was killed and it delayed/stopped the takeover of Baltimore and Ft. McHenry Bombardment, and the Star Spangled Banner being written.

  5. You had Bethlehem Steel down there and we had Luken’s Steel up here. The demise of both can be directly attributed to taxation, regulation and unions. By the way, that’s exactly what the left and comrade Obama are doing to the energy industry as we speak.

    We have some leftist Democrat running for governor and his ad talks about how Pennsylvania is the “only state that doesn’t have an extraction tax” on oil and gas companies. And he thinks we should initiate one to “fund education”. So to a Democrat the fact we don’t have a tax some other idiot state has is a bad thing. I’d be shouting it from the roof tops and getting as many energy companies as I could into the state. Instead he wants to tax extraction to “fund education”. Last time I looked education was funded up the wazoo. So what he’s really saying is : “Vote for me I’ll screw the energy guys and pay off the teacher’s unions”. Does no one realize the jobs this state could get by encouraging energy development? Doe no one understand that if you want less of something you tax it?

    Just so you know Yorkshire, Ft. McHenry is only “little known” to Harvard graduates. The rest of us actually did read history. And we did it without extraction taxes!

  6. Imentioned Tom Wolfe before. He should just stay in his building materials business in York. That commercial of him talking to grade school kids is sickening. To me it is “look kids, the big evil energy companies who exploit the earth are bad and must be punished.”

    Fast Eddie Rendell finished his term trying to raise taxes. That didn’t work well since the Reps in the General Assembly said NO. Wolf’s program is like any other Dem, Leftist, Progressive, punish the successful with taxes and lose jobs. Watching BO do this should be a lesson, but Tom Wolf is not learning it.

    Down here in the state 28th Senate District the Dims are trying to steal a Senate Seat in a Special Election on March 18th. They must be stopped. Dems won’t be happy until the whole state pays the same amount of taxes as Filthydelphia does.

  7. Here is the Battle of Baltimore. What has been well known is the Bombardment of Fort McHenry by sea. What is little known is the land Battle of North Point, and the Non-Battle of Hampstead Hill. At North Point the overall British Commander, Gen. Ross, was killed and the land invasion was stymied. (In the Parliament Building in Ottawa, Canada is a plaque of Battles won by the British in North America. North Point is mentioned although it was hardly a battle. But the Brits claimed the “Win”.) When they marched to Hampstead Hill, the Brits were outnumbered 3 to 1. So they turned and went back to the ships. Then the Bombardment for 25 hours, Key wrote the Battle of Baltimore (Star Spangled Banner), the Brits said screw it and left getting about nothing. Side note: I grew up around the furtherest Brit land advancement. And today I bet most kids in the city would go, Huh?

    Baltimore Battle

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  10. Yorkshire, I was unaware Tom Wolfe was in the building materials business. So you’re saying that on the rare occasion a leftist is in a small business even then he’s too stupid to realize if the state increases the cost of doing business by raising taxes it is the people, the customers, the poor and middle (as comrade Perry would say) that pay the price? Guess radical leftist ideology trumps the needs of the people once again.

    I find him one of those guys I just can’t listen to on TV. His ads drive me crazy. First because his “stupid” is showing but second because he has that earnest, soft spoken Harry Reid line of bullshit going which irritates me.

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  20. The collectivist -in-chief has used his pen to make a law forcing employers to pay overtime to salaried employees. Brilliant! You know, those employees I used to watch come in early, stay late, work holidays and weekends….to prove they had what it takes to get ahead. No more. The guy who never made a payroll is telling us how to run ours again.

    Let’s see, Sbarro and Quizno’s just filed for bankruptcy. Ruby Tuesday, Red Lobster and I believe TGI Friday’s are “up for sale”. Obviously they’re doing well, one always sells a profitable business. (sarc). So now the idiot in DC thinks he knows more than we do about business, about costs, about taxes, about regulations and finally about how much we should pay our employees. And his know-nothing ass hole minions will be right behind him cheering him on for his brilliant business acumen and insight.

    As more Americans loose their jobs or get their hours cut. I guess the saying is spot on: Teach a man to fish and he eats for a lifetime, give a man someone else’s fish and he votes Democrat for a lifetime.

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