Jack

Taking action to reduce inequality would probably increase, not reduce, economic growth.

Tyler Cowen recently directed me to a post by Phillip Longman in the Washington Monthly, which attempts to debunk the “Texas miracle.”  His main argument is that the boom in Texas is a product of the recent oil boom, not good economic policies.  Even that is questionable, as lots of other places have large amounts of oil and gas but simply choose not to frack (Europe, New York, California, Mexico, etc.)  But let’s accept the “Texas is lucky” argument for the moment; do the facts support this multiplier claim?

Unless you’ve been to Texas lately, you might have missed just how gigantic its latest oil and gas boom has become. Thanks to fracking and other new drilling techniques, plus historically high world oil prices, Texas oil production increased by 126 percent just between 2010 and 2013.  .  .  .

To be sure, only about 8 percent of the new jobs in Texas are directly involved in oil and gas extraction, but the multiplier effects of the energy boom create a compounding supply of jobs for accountants, lawyers, doctors, home builders, gardeners, nannies, you name it. Saying that Texas doesn’t depend very much on oil and gas just because most Texans are not formally employed in drilling wells is like saying that the New York area doesn’t depend very much on Wall Street because only a handful of New Yorkers work on the floor of the stock exchange.

You’d think the editors of Washington Monthly would have at least checked the data, to see if his multiplier claim was accurate.  It only takes 5 minutes.  And as we’ll, see the data decisively rejects this argument.  But first a bit of history about Texas oil production.  Notice how it plunged in the decades after 1975:

Now look at the population growth by decade:

1970-80:  27.05%

1980-90:  19.89%

1990-2000:  22.74%

2000-10:  20.63%

Texas’s population grew at roughly twice the national rate for decade after decade, even as oil output was declining sharply.  Now look at the recent trends in oil output:

So the Texas oil boom was quite recent, beginning about 2010.  Now let’s look at the population growth figures before and after the recent boom:

2005-06:  2.55%

2006-07:  2.01%

2007-08:  2.02%

2008-09:  2.02%

2009-10:  1.85%

2010-11:  1.62%

2011-12:  1.52%

2012-13:  1.50%

Where is all the population growth from fracking?  Where is the multiplier, the spinoff jobs for other sectors? I suppose you could argue that while Texas hasn’t seen any more population growth, the unemployment rate has fallen more sharply than in other states.  After all, only 6% of the Texas workforce is unemployed, as compared to 6.7% for the country as a whole.  The problem here is that unemployment in Texas peaked at 8.3% in February 2010, versus a peak of 10% for the US.  So the fall in the unemployment rate in Texas has actually been smaller than for the country as a whole (even slightly smaller in percentage terms).  The fracking boom has not had a noticeable effect on either population growth or unemployment.

Sometimes I think that Keynesians are so convinced that there is a “multiplier effect” that they don’t even both to check the data.  At least Paul Krugman has the good sense to make the argument in terms of GDP, not population:

But I wanted to follow up on one particular point: the role of oil and gas in recent years. Longman concedes that these industries directly account for a fairly small share of the economy even in Texas, but argues that their rapid growth, combined with multiplier effects, makes them a much bigger story when it comes to Texas growth. Indeed. Let me put some numbers to this, using the BEA data on real GDP by state.

What you learn from these data right away is that Texas is indeed king of the extractive expansion. Nationwide, mining output, measured in 2005 dollars, expanded $29 billion between 2007 and 2012; Texas accounted for $22.7 billion of that expansion. Nationally, the expansion of mining was 0.2 percent of 2007 GDP; in Texas, it was 10 times that, 2 percent.

Oil extraction is very capital intensive, so I don’t doubt the Texas GDP numbers would look better than their population or unemployment numbers.  But that’s not the big story, and even Krugman admits that there’s much more to the Texas growth story than oil.  The big story is that people have been moving to Texas in large numbers for many decades, even decades when oil production was falling fast.

Sorry liberals, but there really is a Texas miracle, and it has nothing to do with “multipliers.”  It is explained by the fact that working class people like to move to states with low living costs (due to flexible zoning), and businesses and high skilled professionals like to move to states with low income taxes.  The working class cares more about the low living costs than the fact that Texas offers less expensive welfare programs than California.  They come to Texas to work, not to collect welfare.  The businesses bring them the capital they need to be productive workers.

My only quibble with Krugman’s post is that he leaves out the lack of a state income tax, which helps explain why Texas grows far faster than other south central states with hot weather and cheap houses.  The big story is that people have been moving to Texas in large numbers for many decades, even decades when oil production was falling fast.

PS. I was going to take Sunday off, but was inspired to write this post by Saturos, who is of course right about the decline in quality of my writing.  That’s what happens to grouchy old reactionaries.  But when Keynesians keep throwing softballs over the center of the plate, it’s hard to step away.  I know Adam Gurri doesn’t read my blog, but perhaps someone can tell him that Knausgaard has inspired me to adopt a maximilist approach.

Update:  Some commenters suggested that the Texas miracle is due to cheap real estate.  This post demolishes that argument.

By Tim Holbrook

The federal government spends a substantial amount on higher education student aid. As of fiscal year 2013, the federal government provided $35.9 billion in grant aid, which doesn't need to paid back to taxpayers, virtually all of which flows to students from low-income families. The Pell Grant program is the largest and best known of the federal grant aid programs, though there are a number of other grant aid programs as well. Though grant aid programs aren't perfect, they do have a very attractive feature: because only low-income households are eligible for Pell Grants, these grants shift out the demand
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On taxes, Dave Camp and Mike Lee point a way forward -- and back.

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Yesterday, the China Banking Regulatory Commission approved a pilot of five privately owned banks – a move designed to introduce competition and private capital into the state-dominated banking sector while providing better financial services for small and medium sized enterprises (SMEs). In doing so, it may have just created the single most powerful company in the world.

If you were driving through the remote Guadalupe Valley in Baja, you might mistake it for an ancient, dried-up port town: A cavalcade of overturned boats scattered across the desert like whale skeletons. In fact, this is Vena Cava Winery, and those old boats house its production facilities.

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This is definitely the Lego Star Wars Sandcrawler I was looking for. It's not as massive as the fan built vehicle that every Lego and Star Wars nerd in the world wanted, but with all its moving mechanism and seven minifigs, it's a must have. Its character and construction seems well resolved. Check out the pictures and the video, because it's really cool.

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Flickr’s Peewee Parker likes to make custom dolls and, as you can see, does some pretty kickass work. This custom Michonne looks like she’d take Barbie out in about two seconds.

She’d probably keep Ken as one of her “pets” while she was at it.

(via The Mary Sue)

If you suddenly disappeared, who would notice that you were gone? The neighbors of one woman in Pontiac, Michigan hadn’t seen her in years. She traveled a lot for work–maybe she was working offsite for an extended period, or she had moved away and simply not sold her house yet. No, she was home the whole time. In her Jeep. Dead.

“Haven’t I read this story already?” you might be saying. You’re probably thinking of when more or less the same thing happened a few years ago, in Florida. In this case in Michigan, all we know so far is that the deceased was from Germany, and had moved to Detroit to work in the auto industry. (Based on her owning a Jeep, we’re going to guess that she might have worked for Chrysler.)

Neighbors couldn’t agree on how long it had been since they last saw her. One said six years, and another guessed three. Authorities told TV station WXYZ that the woman was mummified, so she had been dead for at least a few years.

“You’d think because of her job, and we heard she had a son, so you’d think someone would’ve come looking for her,” one neighbor told a reporter.

Woman’s body found in garage of her foreclosed home in Pontiac years after her death [WXYZ]

Something like this was bound to pop up in the wake of the acclaimed documentary Blackfish : a California state assemblyman named Richard Bloom has proposed a bill that would ban orcas from being used for performative reasons.

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Last year, I predicted that the rising tide of Android gaming would raise all boats — that indie game consoles like the Ouya, the Shield, and the Gamestick could mount a challenge against Xbox and PlayStation because of all the attention they were getting as a whole. Sadly, it looks like I was wrong. This week, the leader of the indie console charge is standing down.

Ouya was in the right place at the right time in the summer of 2012. One of the early Kickstarter darlings, the $99 hackable Android game console raised $8.5 million on the strength of its convictions and the résumés of its founders. Ouya CEO Julie Uhrman — a former VP of digital distribution for IGN and GameFly — offered a compelling vision of a game system that...

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A little-known part of Star Wars history is Black Angel, a 25-minute film that tells the story of a medieval knight returning home from the Crusades and discovering a strange land instead. It was the directorial debut of Roger Christian, who designed the sets on the first Star Wars film, and was given a small budget by George Lucas to create the short film, which was later shown to audiences before Star Wars Episode V: The Empire Strikes Back in Europe and Australia.

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Your Xbox Live dashboard may soon feature targeted political ads. According to the Washington Post, Microsoft has been courting politicians to start using its service to advertise their campaigns, going so far as to hand out promotional information at this week's Conservative Political Action Conference in San Diego.

In 2012 Microsoft rolled out an election hub for the Xbox 360, which featured live coverage and news, but this would be something different — ads that use both public information and data culled from your Xbox Live account to deliver targeted ads for specific demographics. The report makes no mention of the Kinect; Microsoft has previously said that it has policies in place that "prohibit the collection, storage or use of...

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Some people claim that they have experienced out-of-body experiences—aka "astral trips"—floating outside of their bodies and watching themselves from the outside. A team of scientists found someone who says she can do this at will and put her into a brain scanner. What they discovered was surprisingly strange.

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Ian Lipkin, world-renowned virus hunter, is often jetting off to far-flung countries—countries in the middle of strange epidemics, that is. From SARS in China to MERS in Saudi Arabia, his lab has discovered or characterized over 500 viruses previously mysterious to humans. But what's it like working on the frontlines of an epidemic? How do you identify a virus you can't even see? Gizmodo got in touch with Lipkin to ask some questions about the life of a virus hunter.

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Do you ever sit there and wish your desk were better suited for your many gadgets? Seriously, that standard flat piece of wood you've been sitting at for years was not designed for computers, much less tablets or phones. But the SlatePro is.

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This magical, 17-story tower is set to rise in Montpellier, France, after Japanese architect Sou Fujimoto won a competition to design it this week. The complex's name? L'Arbre Blanc, or "the White Tree."

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I just came across this cool old time-lapse video made by scientists from the US Geological Survey: The collapse of the crater floor of the Puʻu ʻŌʻō, one of the cones of the Kīlauea volcano in Hawaii.

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It's no Forrest Gump but this moving one armed robot is plenty good at ping pong. And may be even better than you. Watch it extend its arm to cover ground, cycle through backhand and forehand shots and hit the ball so effortlessly that it seems like an invisible human is controlling it.

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Ah, caffeine. So addictive. So energizing. So unhealthy. It's no secret that coffee lends itself to spurts of early-morning productivity, only to be followed by mid-afternoon slumps. And yet, we're somehow always surprised when that 4PM frappuccino...

The Federal Aviation Administration may want to go through some rigorous testing before it allows commercial drone flights on a broader basis, but the National Transportation Safety Board isn't willing to wait that long. One of the Board's judges has...

You're gonna want to steer clear of this CUPID. The Chaotic Unmanned Personal Intercept Drone, or "stun copter," can deliver 80,000 volts of pure projectile terror directly into the skin of an ill-intentioned hoodlum. This is serious business for...

T-Mobile's customer-friendly "Uncarrier" schtick seems to be changing people's minds about the country's 4th largest wireless provider, and it's not done fiddling with that formula just yet. The folks in magenta just announced a slew of tweaks to its...

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Nintendo has been in the news a lot lately, largely thanks to the lackluster sales of the company's Wii U console.