Texas tea

Why is Texas hurting less than other states in our ailing economy? Slate looked into that issue, and found that the Lone Star state has had one huge advantage -- regulation.

Second, Texas kept its housing-finance regulations tight. As Alyssa Katz noted last year in The Big Money, Texas has had a longtime commitment to ensuring that homeowners make significant down payments and do not use their houses like piggy banks. The rules bar Texans from taking out home-equity lines of credit worth more than 80 percent of their mortgage. They also ban "cash-out refinancings," which add to homeowners' debt.

As a result, Texas never had a housing bubble.

I wonder how the libertarians explain away that one? Maybe a Perry candidacy will allow us to sneak an important message past the media gates: Libertarianism caused the economic collapse. Libertarianism is the problem, not the solution.

Also, although the stimulus was ridiculously tiny -- most of it went to tax cuts, a key fact which our media won't tell you -- Texas hogged a lot of the stim money that Obama handed out. $29,601,045,010 worth, to be exact. Granted, California got even more, and is still doing badly. But the housing madness hit my home state particularly badly. (Thank you, libertarians!)

Krugman had an excellent column on this topic a while back.

Last February, Barbara Bush -- of all people! -- contributed an opinion piece arguing for increased spending on education in Texas:

•  We rank 36th in the nation in high school graduation rates. An estimated 3.8 million Texans do not have a high school diploma.

•  We rank 49th in verbal SAT scores, 47th in literacy and 46th in average math SAT scores.

•  We rank 33rd in the nation on teacher salaries.

Perry cut the education budget by four billion dollars. Most of the jobs created in Texas were minimum wage -- and those workers don't really need no readin' and writin', now, do they?

Oh, and there's another aspect of the Texas economic "miracle" that nobody likes to talk about: Drugs.

Under Rick Perry and George W. Bush, Texas became the trans-shipment point for into the U.S.

Jack Schumacher, a recently retired Texas-based DEA agent, says that at least half the drug shipments coming from Mexico stop and offload in Texas. The product is repackaged in small units and resold at a considerable markup, with a share of the gross staying in the state. Even some of the money that gets expatriated to Mexico winds up back in Texas, laundered through Mexican currency exchanges. The state’s relative security is the draw. “If you have a few million,” says Schumacher, “would you invest in a war zone or a bank in San Antonio?” The DEA warns that traffickers are cleaning up their proceeds by buying businesses in South Texas. They also spend on guns, warehouses, security guards—and on luxury cars and houses.

The drug-fueled Mexican nouveau riche don't want to live in the old country. They come to Texas, buy big homes, and help spur the economy.