As expected, Rick Perry, the governor of Texas, has announced that he is running for president. And we already know what his campaign will be about: faith in miracles.
What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states. I believe that the appropriate response to this insight is “Well, duh.” The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state.
In fact, at a national level lower wages would almost certainly lead to fewer jobs — because they would leave working Americans even less able to cope with the overhang of debt left behind by the housing bubble, an overhang that is at the heart of our economic problem.
While I was up at the shop last week, one of Harry's customers was bitching about how NY sucks (taxes too high, housing too expensive), that he should move to Texas because there's a lot of work and he could buy a house for $50K. I asked him if he was willing to work for $4/hour (or whatever minimum wage passes for down there) and he said "hell no". I asked him if he can do without healthcare for his 2 kids and again the answer was "hell no". So I asked why he wanted to move there and he said "because I heard it was so good". I asked him if he watched Fox 'News'. Guess what the answer was.
And just a little note, for those people who could be lured somewhere by "a low cost of living": Low living costs also mean lower wages and less services. Yeah, you can buy a cheap house in Texas for half of what you can on Long Island but you can be assured your take home pay will be a third of what it is here. I don't see how that makes it any easier to survive.