Texas or Taxes?
The economic crisis has highlighted the distinction between Texas and California in the area of financial management and governmental priorities. Lower taxes, greater emphasis on assimilation and easier regulation on companies are typically among the major factors credited to Texas’ outperformance in recent years, while the Golden State has pursued a not-so-golden path marked by fiscal waste and mismanagement. Because of their size, influence and ideological slants the two states can be seen as the paragons of modern American liberalism and conservatism, respectively. And this is happy news for the right, particularly in the age of the big-spending Obama Democrats. California’s economic crisis and fiscal debacle is seen as a sign of things to come for the country as a whole under Democratic leadership.
There is no question that unchecked progressive idealism, agnostic to the harsh realities of limited public resources is a recipe for disaster. But how is unchecked conservative idealism any less of a threat? Whether in the form of wars in the name of “national defense,” tax breaks for the richest, or subsidies to large corporations, Republican waste is necessarily just as bad.
And here is where we uncover the real story. As some have noted, Texas outperforms California in many respects even according to the goals of the high-tax, high-benefit model. Therefore, in many respects, right-of-center economic policies work. But we know that in many respects they do not. As I recently noted, the laser-focused concern with lowering income tax rates by conservatives is wrongheaded, with data backing me up. In addition, blind deregulation and trust in rational markets was a major contributing factor to the economic crisis.
We can conclude, then, that while a robust social safety net is a must for prosperity growth, other, unequivocally right-of-center approaches are vital as well. Common sense welfare and transfer payments are obviously necessary, but low taxes and light regulation for small businesses themselves constitute extremely powerful “welfare” policies insofar as they help lower- and middle-class people to start a company, run it profitably, and employ two or three other people.
The Texas-California divide brings to light some important distinctions between liberalism and conservatism, but it would be a mistake to see it as final proof that conservatism works and liberalism does not. Aside from the fact that the Texas government just seems to work better than the Californian, we must remember that, being a state, Texas benefits from many left-of-center policies and programs that are national in nature. And, again, we know that many economic assumptions of the right have been proven false.
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